Q: Will salary disclosure and pay equity laws affect the future of hiring?
A: It’s no secret social movements, the pandemic and other forces have shaped the discussion of how to attract and retain the top talent for the workplace. Pay equity was first addressed with the Equal Pay Act (EPA) in 1963, so the issue of a disparity in pay among men and women in the workforce has been around for quite some time. The EPA makes it unlawful for an organization to have explicit practices and policies that pay men and women differently for the same work. The growing slate of salary disclosure and pay equity laws are an extension of the EPA to continue to address workplace inequities.
Employers of all sizes must take a deep look into strategies and policies that affect hiring and retention of employees and a key factor is compensation. Salary disclosure legislation has been enacted in multiple states and municipalities and has widened the discussion about salaries in the workplace. Most recently, California has passed legislation, following Colorado, New York City, Maryland and Rhode Island, which requires employers to disclose pay scales in job postings and to current employees upon request. This is in addition to 14 states that have laws that prohibit employers from asking job candidates their salary history, and 20 states and Washington, D.C., that offer protections for workers discussing pay. The goal of these new laws is to address disparities in the workforce. Nevertheless, salary disclosure and pay equity legislation will impact recruitment and retention in two key ways.
Efficiency. For any position, a salary must be determined. When salary disclosure laws are in play, that determination is made at the outset of the hiring process instead of at the end. Salary disclosure laws make the recruitment and retention process more efficient for employers and employees alike. There are significant costs associated with onboarding and retaining new employees and there is nothing more frustrating than going through multiple rounds of interviews only to find the salary offered to the top candidate does not meet their expectation. Employers can set budgets more efficiently when relying on a standardized assessment related to worker experience, qualifications and competencies when establishing compensation and classification for current employees or prospective job postings which avoid the pitfalls of implicit racial or gender bias.
Positive work culture. HR professionals are tasked with a weighty responsibility of ensuring a positive work culture and employee engagement. Open communication surrounding compensation goes a long way to cultivate a positive employee experience when information is shared freely in an effort to benefit the employee and the organization. Salary disclosure requirements can lay the foundation of trust between employees and employers to build long-lasting relationships. When employees feel they are fairly compensated, they feel appreciated, are more likely to be productive employees, and have a sense of loyalty to the company.
Salary disclosure laws are another step towards balancing equality in the workplace and may be coming to a city or state where you operate so the question is not will you be required to comply with such laws, but when. With an eye to recruitment and retention, now is the time to be proactive and see how salary disclosure laws can positively impact your workforce strategies and policies. It is important to have salary disclosure and pay equity laws on your radar not only for compliance purposes, but also for continuous improvement efforts within your organization.
This column is provided by Ogletree Deakins, Atlanta, as part of a partnership with the American Rental Association (ARA) for ARA’s Human Resources Assistance Program. ARA members can receive a single sign on from the ARA webpage to a microsite specific to ARA on the Ogletree Deakins platform; get access to two 30-minute calls with an HR professional per year; access to an FAQ section as well as to Ogletree Deakins’ library of webinars; and access to Ogletree Deakins’ ARA-specific webinars. To learn more online, visit ARArental.org/Manage-Business/HR.