If 2022 was the year of the Great Resignation and Quiet Quitting, then 2023 could turn out to be the year of redefining employer-employee relationships. This theme was touched upon by Staffing Industry Analysts (SIA) at the GigE conference last September. With sudden return-to-work policies, ongoing skills shortages, and the economy attempting to find its footing in the post-pandemic “new normal,” the workforce is becoming more cautious while companies are seeking better ways to refine their employment brands. Labor regulators, meanwhile, continue to push ahead with efforts to bolster pay equality. In response, more companies and state legislators will be adopting or introducing pay transparency rules in 2023. Here’s what business leaders need to know.
Building Trust in a Time of Uncertainty
Back in January 2021, an infamous Microsoft survey indicated that 41% of workers across the globe were thinking of leaving their jobs. Four months later, according to the Bureau of Labor Statistics (BLS), 4 million U.S. employees tendered their resignations. And in June 2021, Monster.com presented a harsher reality.
“A majority of Monster's respondents, 66%, believed there were job opportunities available for them, and 92% said they were willing to change industries for the right role — a potential sign that workers are feeling more confident about their prospects in the tight labor market,” wrote Anna Cooban for Business Insider.
Burnout shone as the biggest factor. Yet the second-highest reason for wanting to quit, at around 29%, was a lack of growth opportunities, the Monster poll showed. Of course, tied to all of that was commensurate compensation for increasingly demanding work. We’d all love to believe that hip work cultures and compelling missions are the recipes for attracting amazing talent. And they matter. But at the end of the day, salaries remain primary factors in determinations that involve choosing or leaving a company, especially as workloads and performance goals grow.
Job seekers are conducting greater research into potential employers these days and taking more time to make decisions. They want assurance that promises will be honored and that they are being fairly compensated in a competitive market.
As the Los Angeles Times noted, “Knowing if you’re being paid fairly for the work you do is a mystery shrouded in a lack of information. That may be changing, though, and pay transparency may be the catalyst. It’s a growing trend for companies to reveal what a job opening or current position pays — whether voluntarily or because governments mandate it.”
Beyond that, pay transparency has also proven effective in closing wage gaps and fostering more pay equity across gender, racial, and LGBTQ+ identities, a win for diversity. Consider the situation for working mothers. Full pay parity has yet to be achieved, and with child care costs soaring (some families reported 20% of their income going to child care in 2022), healthy wages and remote working options remain instrumental to hiring initiatives.
As pay transparency gains steam in 2023, it will also become a legal consideration that businesses must adapt to and comply with. Here’s what to know.
Pay Transparency Laws in Effect for 2023
“In 2021, Colorado paved the way for new laws requiring businesses to list salary ranges on job ads, and New York City rolled out its own pay range law in November 2022,” CNBC’s Jennifer Liu explained. “A handful of other states and cities say employers must share the salary range for a job during the hiring process.”
California amended its labor code, which now requires employers with 15 or more workers to list salary ranges on job postings, whether they appear on a company recruitment page or third-party job board. Businesses must also reveal pay scales to current employees for their job titles upon request.
The law makes California the largest state to require pay information in job listings. The state is host to 19 million workers and about 200,000 employers. It’s also the heart of big tech and entertainment, so companies such as Google, Apple, Salesforce, Meta, Disney, NBCUniversal, Sony, and others will need to comply.
The Equal Pay and Opportunities Act went into effect in Washington on January 1, 2023. Like California, employers with more than 15 workers must share pay ranges for any job ads that appear on a company’s website or third-party job board. After that, Washington’s law adds a few more parameters.
“The law applies to companies that have at least one Washington-based employee, engage in business in the state or are recruiting for jobs that could be filled remotely by someone in the state,” Liu wrote.
Company benefits must also be listed to candidates. The Equal Pay and Opportunities Act states that the description of benefits must clarify “health care benefits, retirement benefits, any benefits permitting days off (including more generous paid sick leave accruals, parental leave, and paid time off or vacation benefits), and any other benefits that must be reported for federal tax purposes, such as fringe benefits.”
Rhode Island’s pay transparency rules are looser than California’s and Washington’s, but an amendment to the state’s Pay Equity Act now requires companies to provide salary ranges to applicants who request them. This also applies to existing employees who ask about wages for their positions. Companies in the state, however, are not required to post this information on job listings or ads. There are a few other aspects involved here, as well.
- Employers must disclose minimum and maximum figures for the range prior to discussing total compensation.
- The same salary information must be reiterated at the time an official offer is extended.
- Salary ranges, following the same rules, must be disclosed when employees move into new positions within the organization.
Although New York has yet to unveil its pay transparency law on a statewide level (New York City already has one), the government approved a bill in December 2022 that’s expected to go into effect around September 2023. Mirroring the existing rules in New York City, the overarching state law will require employers with four or more workers to disclose salary ranges for all advertised positions or promotions.
Pay transparency legislation is still pending in Massachusetts and South Carolina, but those laws will likely pass before this year ends. Analysts believe that these pay transparency laws are not isolated trends or regulations from “progressive” outlier states — they anticipate similar rules to crop up across the country and become part of a national norm.
As Liu indicated in her article, “Altogether, by 2023, roughly 1 in 4 workers will be covered by a state or local law that requires businesses to be transparent about their pay ranges, according to calculations from analysts at Payscale.”
What About Remote or Temporary Workers?
Of particular importance to the staffing industry or companies with a sizable remote workforce, these laws may affect their businesses even if their headquarters fall outside the states currently covered by pay transparency laws.
“They could be bound by them if they plan to hire remote workers, or they may want to compete with big-name companies in Silicon Valley and on the coasts,” Liu pointed out. Because staffing agencies often provide talent to clients across the nation, we believe that adopting pay transparency policies as a rule, rather than an exception, may be the most productive way to stay in compliance, build a trusted brand with candidates, and stay ahead of the curve as more regions of the country roll out their own iterations of these bills.
Photo by Katie Harp on Unsplash