The Year of Pay Transparency

The way we work has changed dramatically over the last few years. We’ve learned how to hold meetings via Zoom and share projects via Asana. Self-care has become an imperative retention strategy for HR departments. Many of us have changed our priorities around work/life balance. And both women and people of color have finally been heard after decades of questioning why they are not receiving the same pay as their white colleagues.


According to Payscale, women earn 82 cents for every dollar white men earn. Black men earn 87 cents and Hispanic workers earn 91 cents. Black and Latina women earn 58 cents and 49 cents for every dollar a white man earns. 


Pay transparency is one strategy equal pay proponents are advocating for. By making salaries public knowledge, the hope is that companies will move closer to ending gender and racial wealth gaps. This is just the start of a historic trend in how companies hire and retain employees equitably. 


The Legislation

The Federal government has had pay transparency rules for federal contractors for decades. About 20 states and some cities have passed laws requiring employers to provide both external and internal job applicants with the salary range for a position during the hiring process. The terms of transparency and how the laws are enforced vary by state. 


Starting on November 1, 2022 in New York City, employers with four or more employees must include a “good faith” salary range for every job, transfer, or promotion advertised. The four employees do not need to work in the same location, and only one worker needs to work in New York City. Employers must include both a minimum and a maximum salary. The Commission on Human Rights will investigate complaints of discrimination. Employers found to have violated the transparency law may have to pay up to $250,000 in civil penalties.


Colorado‘s Equal Pay for Equal Work (EPEW) Act bars an employer from paying an employee of one sex less than an employee of a different sex for the same work. Recently, Colorado implemented Equal Pay Transparency Rules, outlining both external and internal job posting requirements for Colorado employers. Compensation in any job posting is required if the employer has at least one Colorado employee, the job is located in Colorado, or is advertised as being remote. The compensation range should be a reasonable estimate of the lowest to highest pay. A Colorado employer must also internally announce all “vacancies in an existing or new position considered to be a promotion for one or more employee(s) “. Exceptions to the external and internal transparency requirements include temporary positions, automatic promotions within one year, and promotions to replace incumbents who are “unaware of their separation for compelling, confidentiality reasons.” Because the law includes remote positions in the state, this law is considered the most aggressive.


In 2018, California was the first state to pass a mandatory pay transparency statute. California employers are required to give external applicants the pay scale for a position they are applying for “upon reasonable request,” which means the applicant has to ask for it. California also passed the first state-level payroll reporting requirement in 2020. That law requires employers with 100 or more employees to provide their number of employees by race, ethnicity, and sex within each of the “pay bands” used by the U.S. Bureau of Labor Statistics.


As of January 2022, 17 states have adopted pay transparency laws, including Connecticut. Illinois, Louisiana, and Virginia.  Rhode Island’s law is going into effect in 2023.


The Pushback

In general, some employers are opposed to the pay transparency trend. Coming out of the pandemic and experiencing a massive hiring and retention crisis, businesses are worried these laws would result in an even tighter labor market. 


A trade group sued Colorado to block their transparency legislation. Their concerns match most of the complaints from employers around the country. The first concern is that job postings are visible to everyone, including competitors, making it easier to poach employees. The listings also uncover pay disparities to employees, who might demand the same salaries offered to new hires.


Also, since remote work has become more common, large national companies with at least one employee in Colorado are now required to post salaries for any remote role that might be done by an employee in that state. Some employers barred Colorado residents from applying for their remote positions. Colorado lawmakers quickly deemed that practice illegal. The Colorado lawsuit was not successful.


The New Normal

Inc. Magazine is calling 2022 “The Year of Pay Transparency”. It seems like the trend towards pay transparency is here to stay. More states are working on laws that will require employers to publish salary ranges in job openings. While this may seem dangerous to employers in the short term, the long-term outcome of pay equity seems more than worth the initial pain. 


If you are on the job hunt in 2022, we suggest researching the pay transparency laws in your state and advocating for yourself and your fellow tech sisters by insisting the salary reflects your worth. Starting in May, all jobs added to the Lady Bird Talent job board must include salary ranges. Use our post as a tool to see what other startups are paying. We have the right to know what the salary range will be for any job. Don’t be afraid to ask!

Ready for your Career to Take Flight?

Signup for the Lady Bird Talent Job Board

Get updates from Lady Bird Talent.