What Is Salary Transparency and How to Prepare

salary transparency

Compensation has historically been considered a taboo subject, but that’s changing. Online job postings and self-reported wage tools have made it easier than ever for your candidates and employees to research pay. Many employees are discussing compensation among themselves at work. And an increasing number of employers are embracing salary transparency.

Salary transparency — also known as pay transparency or wage transparency — is the practice of openly communicating information about compensation with employees and candidates. This can look a little different at each company. While some companies share all salary data publicly, some simply disclose how salaries are determined with each team member. Many employers also share salary ranges so team members understand their earning potential in a given role.

Legislation Is Driving Higher Salary Transparency

Pay transparency isn’t just a good way to be more open and honest with your employees — it is more and more often the law.

New pay transparency laws crop up regularly and legislation differs by jurisdiction. It’s important to stay on top of the local laws and regulations where your company operates or has employees.

Within the United States, for example:

  • California’s new pay transparency law became effective on January 1, 2023. It requires covered employers to include pay ranges on every job posting and share pay ranges with employees for their current position.
  • New York’s law will go into effect in September 2023, requiring that employers disclose pay or a pay range for all jobs, promotions, and transfer opportunities that can or will be performed in the state.
  • Maryland employers must provide the wage range for a given position upon an applicant’s request.
  • Cincinnati employers must provide a pay range after a conditional offer of employment has been made.

Similar pay transparency laws, including The European Union’s Pay Transparency Act, are being proposed globally. It will require employers to include a salary range in job posts or before an interview. It also gives employees the right to request information about their individual pay level and the average pay level for colleagues doing similar work.

These laws are driving higher pay transparency. Nearly one in five organizations report being transparent largely due to regulations, though another 42% say their transparency goes beyond what’s required or motivated by regulations alone.

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