Several US states have recently passed payroll transparency laws in an effort to ensure fair pay. Not so long ago, the city of New York took a particularly similar step, following in the footsteps of California, Colorado, Nevada and even Maryland. The law will come into effect in New York on November 1, 2022.
In the world of work, salary amounts are often well-kept secrets. How much does your colleague, brother, sister, friends earn? You do not know. And the topic cools conversations when it comes up. Despite Gen Z’s open-mindedness, the silence persists, creating an inequality of pay.
A recent Linkedin survey, published on June 29, 2022, indicates that only 32% of 5,000 US respondents would share their paycheck data with their friends; 16% of respondents say they do it with their trusted colleagues.
To restore wage equality in companies, states and now cities are passing laws. In New York, a change goes into effect on November 1, 2022. The change was passed in January 2022 and requires companies with 4 or more employees to list a salary range on their job listings.
This initiative follows in the footsteps of an initiative launched earlier in January 2021 by the state of Colorado, which ruled on equal pay for equal work. To date, California, Connecticut, Maryland, Washington State, and even Nevada have enacted legislation on this matter. Depending on the region, giving the salary range on job openings is still not mandatory, but employers are required to disclose the pay of the position if a candidate requests it.
These laws against wage opacity come at a time when the labor market is tight in the United States. By making salaries as transparent as possible, you attract more potential candidates. If the salary scale is known in advance, employers may see less dropout during job interviews. These laws would also help narrow the gender pay gap or minority job applicants.
Mixed reception for companies
In Colorado, Loren Furman, president and CEO of the Chamber of Commerce, told The Times that: “This law has probably caused the greatest consternation among Colorado employers.” It sets up the observation of a law that is more “complicated” and “troublesome” for companies than “expected”.
Compensation ranges for new job openings can sometimes exceed what companies pay their employees who currently work in the same position. And some companies are dealing with “internal turmoil” caused by employees who feel “underpaid,” said Tracy I. Levy, an employment attorney at Forbes magazine. The US media even wonders whether this law “Pay transparency solves an age-old problem” on wages.
But in a tight job market, candidates have a lot more information to apply for offers. They won’t dwell on a job they consider poorly paid and will save time in their research. Young candidates or candidates who have not applied for a long time also have useful information to avoid committing themselves to underpaid contracts.
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