Serah Louis
Tue, September 13, 2022
A growing number of states and cities have begun establishing laws to encourage pay transparency — although there are still many corporations around the country that keep salary talk hush-hush.
“There's definitely a culture of secrecy in the United States,” says Andrea Johnson, director of state policy, workplace justice and cross-cutting initiatives at the National Women’s Law Center, based in Washington, DC.
“That comes from a lot of different directions. But it's definitely coming from employers that have long felt that it's to their advantage to keep pay and how they set pay secret.”
This workplace culture appears to be slowly shifting as more states introduce laws around salary transparency.
California recently made headlines for approving a landmark bill mandating more transparency from employers when it comes to disclosing wage gaps and posting salary ranges on job listings.
Some experts say these laws are especially advantageous when it comes to attracting new hires or reducing pay inequity — but there may be caveats for both employers and employees to watch out for as well.
More states are requiring salary ranges on job listings
California’s new law would require employers with at least 15 workers to include the hourly rate or salary range on job listings. The bill is heading to Governor Gavin Newsom, who has until Sep. 30 to either veto or sign it into effect.
Over a dozen states and localities have some sort of law requiring salary disclosure. And since 2018, eight states have passed laws requiring employers to post salary ranges on job listings, says Johnson.
Some laws, such as in Colorado, prevent employers from inquiring about their employee’s past salary experience as well. Twenty states have protections in place to allow employees to discuss their wages with a colleague without facing retaliation from an employer.
How can these laws change the employment landscape
Experts like Johnson have advocated for these laws to help reduce racial and gender wage gaps — which often get swept under the rug when there’s less transparency in the workplace.
Women earn 83 cents for every dollar a man makes, according to 2021 data from the Bureau of Labor Statistics. And Department of Labor data indicates most racial minority groups also earn significantly less on average compared to white workers.
California’s new law also says companies based in the state with more than 100 employees will also need to show their median gender and racial pay gaps, which is a notable first for a U.S. state.
“I think we're in a moment of cultural change in the last few years, where employers are realizing that it's actually to their advantage to be more transparent about pay,” says Johnson, adding that the country is still contending with a tight labor market.
July data from the U.S. Bureau of Labor Statistics shows that there were 11.2 million job openings on the last day of the month — compared to 11 million openings in June. Johnson believes employers who post their salary ranges may have better luck attracting new talent.
Johnson believes employers can actually benefit from being more transparent — by building trust with their employees.
“Transparency is power,” she says.
However, there’s also been some pushback from businesses. New York City’s pay transparency law was delayed from May to November. And some companies have reportedly been excluding remote work applicants from Colorado, which requires that even companies that aren’t based in the state follow its pay transparency law for an employee who does reside in Colorado.
Are there any drawbacks to these laws?
These pay transparency laws can vary across the country, which means employees and employers need to do their research first.
“The devil is in the details,” notes Beth Ann Lennon, a labor and employment lawyer at Sherman & Howard, based in Denver, Colorado.
Some states require salary postings on job postings, while others only provide this information upon request or during the application process. Some may require companies hiring outside of the state to adhere to the same rules.
And Lennon says while the intent behind these laws may be to encourage more open dialogue around pay and to address pay inequity, she adds, “Whether that intent is being accomplished, I think, is more of the open question.”
She offers the example of an employee negotiating for a higher salary in a state like Colorado that bars employers from using past wage experience to determine the employee’s current salary.
“There are laws telling you don't talk to your employees in the way that you historically have — as it relates to what are your pay expectations, what have you made in your last jobs? That kind of back and forth sometimes really helps an employee advocate for themselves,” Lennon explains.
“And so one of those tools that an employee may have previously had is gone.”
What do employees need to know?
If you’re trying to figure out how your pay compares to your coworkers, you may have considered sharing your salary information with them, or asking them about their own.
But talking about salary with a coworker remains a controversial topic — some employers still discourage the practice.
Under the National Labor Relations Act, employees have the right to talk about wages with another employee, while some states also include their own laws and protections around discussing pay.
“But that doesn't always stop an employer from retaliating and somebody potentially being demoted or losing their job, which can be really harmful and not immediately remedied,” notes Johnson.
For those who would prefer to keep that information to themselves, Lennon says you also have the right to not engage in conversations about salary with another employee as well.
For those on the job hunt, Johnson recommends looking into your state laws.
If you’re able to request salary information from a potential employer, she says it’s important to do so as quickly as possible to help you decide how to negotiate.
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