Job-seekers around the nation are likely to receive more information about what a position pays within advertisements in 2023, as large states join a growing push toward pay transparency.
New laws taking effect in California and Washington state on Jan. 1 require employers with at least 15 employees to disclose pay ranges for open positions. A similar law will be effective in New York later in 2023, and is already on the books in Colorado.
With the adoption of these laws in the nation’s biggest states, it’s possible the inclusion of pay information in job listings could spread around the nation as companies adopt a uniform approach to comply. A cosponsor of the California law said it could be a “win-win” for employers and employees alike.
“It could be beneficial for employers so they don’t have to go through the time-consuming process of interviewing a candidate only to find out that they’re not willing to accept the offer,” said Jessica Ramey Stender, policy director and deputy legal director of San Francisco-based gender-justice nonprofit group Equal Rights Advocates, in an interview with MarketWatch on Thursday. She added that pay ranges could also attract candidates that may not otherwise have applied for a position.
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In California, the law also expands required pay-data reporting by companies about all workers including contractors, and allows workers to ask their employers for the salary range for their current positions. In Washington, the law also requires companies to provide salary ranges upon request when an employee is offered an internal transfer or promotion.
The overall goal of this type of legislation is to address persistent gender- and race-based wage gaps, Stender said.
“Nearly 60 years after the federal Equal Pay Act was passed, women and people of color are still suffering from pervasive wage gaps,” she said. “It’s really incumbent upon all of us to continue to push for stronger equal-pay laws that address the drivers of the wage gaps.”
For example, findings released by California’s Department of Fair Employment & Housing earlier this year show that women and people of color are overrepresented in low-wage jobs, earning $30,679 or less in 2020, and underrepresented in the highest-wage jobs, which earned $128,960 or more in 2020. The findings are based on data collected by the agency from submissions by private employers in California with 100 or more employees, as required by a state pay-data reporting law passed in 2020.
California’s inclusion of an expansion in transparency requirements on demographics and pay to contracted workers is significant, Stender said. Many tech companies in California use contractors, but the practice is also pervasive in other industries, she said.
“What’s troubling about this growth of what I call a permanent-temp workforce is that they are often paid far less money than direct-hire employees for doing often the exact same job,” she said. “Transparency around this is critical issue of race and gender equity.”
A study by TechEquity Collaborative, which also cosponsored the California bill, found that contract workers make 75 cents for every dollar direct employees make.
In requiring companies to include pay ranges in job postings, California and Washington join Colorado, which became the first state with the posting requirement last year. Come September 2023, New York state will also join the list, after that state’s governor signed similar legislation last week.
Meanwhile, New York City’s requirement on salary ranges in job postings went into effect last month, and so far it appears that some companies may need to be nudged to disclose pay ranges that prospective employees can actually use to make informed decisions about applying for jobs. Some companies have reportedly posted such broad salary ranges — of $100,000 or more — that they are largely useless.
The city’s Commission on Human Rights did not immediately return a request for comment on whether companies that are including overly broad salary ranges are in compliance with the law.
Other cities and counties on the East Coast have also adopted pay-range posting requirements this year. They include New York’s Ithaca and Westchester County, and Jersey City, N.J.
Additionally, other cities and states — such as Connecticut, Maryland, Nevada and Rhode Island — have pay-transparency laws that require companies to disclose pay ranges at the request of job applicants or employees, though employers don’t have to disclose pay ranges in job postings.