California, which employs 19 million people and is home to some of the most well-known corporations in the world, like as Apple, Disney, Google, and Meta, may soon adopt a new compensation disclosure rule.
A bill requiring the inclusion of the hourly rate or wage range on job postings has been approved by the state assembly, which will apply to all firms in the state with at least 15 employees.
According to the state’s Equal Salary Act, companies are currently required to provide the pay range for a position upon request from a candidate following an initial interview.
A recent law exempts California-based businesses from publishing wage ranges on job advertising for positions they fill with employees outside the state. However, businesses based outside of California that are hiring for positions to be filled in California must disclose wage ranges in accordance with the legislation.
The Democratic governor of California, Gavin Newsom, will now either sign the bill into law or veto it. It might open the door for additional regulations throughout the US. According to Jamie Kohn, director of Gartner’s HR practice, CNBC Make It.
Pay transparency, according to employees, is about “fairness and respect.”
According to Kohn, employees are now more concerned about salary transparency because of remote work, the Great Resignation, and the power that individuals now have in the competitive job market.
According to a June Gartner poll of more than 3,600 people, 66% of job seekers anticipate compensation information in the job description.
“Pay transparency is not just about the money,” Kohn adds: “It’s about fairness and respect. Candidates tell us they see companies who don’t include salaries in job descriptions as being less fair. So it’s really driving how people perceive your organization — not just from a money standpoint.”
In other parts of the country, such as Connecticut, Washington, and Nevada, salary transparency laws already exist and have recently gained popularity.
As of January 2021, all job advertisements in Colorado must comply with the Equal Pay for Equal Work Act, which mandates that employers state the salary range. According to preliminary data, despite a decline in employer listings, the shift may have helped more people find employment in the state.
The pay transparency rule that was originally scheduled to go into effect in May will now do so in November in New York City, which has almost 4 million private-sector employees.
The vast majority of workers support salary transparency rules, which economists believe are essential to eliminating the gender and racial wage discrepancies. According to the U.S. Census Bureau, women make 82 cents for every dollar made by men, and the disparity is even greater for many women of color.
Pay transparency, according to hiring specialists, can also be a significant recruitment tool, especially in the competitive job market of today.
Kohn claims that there are some drawbacks for the employer. One reason is that it will take a long time to implement new laws into compliance. HR executives can be concerned that employees will place a higher priority on base salary than on other perks offered by the company, such as good benefits, flexibility, and advancement chances. Furthermore, if staff members believe they are being paid less than a brand-new external hire, this could result in dissatisfied workers.
Additionally, “companies may choose to pair salary transparency with a broader pay equity move in the organization, and right-size people’s pay more broadly,” Kohn says. “That’s a very expensive prospect.”
However, Kohn asserts that other nations, regions, and companies should use California’s most recent action as a cue to begin developing and enforcing their own transparency laws.
“Companies have had a lot of warning that this is the direction we’re heading,” she says. “Most of the companies I talk to know that it’s going this way and have been trying to figure out the best way to implement it.”
Given that workers have more negotiating power than ever in the present employment market, the fight for pay parity is likely to continue after this one. Despite a cooling in hiring demand, “there are some things people aren’t willing to sacrifice and go back to the way things were before,” Kohn says.
