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Pay Transparency is Expanding – Time to Start Thinking About Your Compensation Plans!
Sep 21, 2023 8:00:00 AM
Compensation planning has been a long-established element of an employer’s overall human resources strategy. This is due to the fact that compensation plays a pivotal part in recruiting talent, retention, and creating an environment where employees feel they are properly compensated in comparison to their value in the employment marketplace.
Recently, many states and localities have taken the initiative to pass legislation that actually requires employers to provide more visibility into their compensation plans for current and prospective employees. This expanding legislation is known as pay transparency and it is gaining traction nationwide.
What exactly are the goals of pay transparency and how do these new laws correlate to an effective compensation plan? The answer to this question will help employers understand their role in not only complying with developing laws, but also encourage the best creation of compensation plans.
What is Pay Transparency?
Simply stated, pay transparency is the idea that companies openly and proactively share information on organizational compensation practices. Pay transparency laws, predominantly requiring employers to post salary ranges, are pushing employers to think more deeply regarding how and what they pay their employees.
Pay transparency initiatives intend to reduce unequal pay across the U.S. labor force and make it easier for employers to address any disparities in pay within their organization as well as comparatively to other employers.
In states such as CA, CO, CT, MD, NV, NJ, NY, OH, RI, and WA, pay transparency laws already exist and this is only expected to expand as trends towards reducing pay gaps become more prevalent. Employers nationwide, but especially in these states, need to familiarize themselves with the laws surrounding pay transparency to avoid non-compliance and potential fines.
Compensation Planning
Traditionally, compensation has been a poorly communicated and loosely based aspect of the overall workplace strategy. However, with the rise of pay transparency legislation, employers and HR professionals are changing the way they think about their compensation strategies. These new laws are pushing organizations to develop plans that are backed by factual salary data.
As more pay data becomes publicly available, it is expected that more and more employers will need to start utilizing market data to maintain a competitive edge in the contest for talent. The benefits of developing compensation plans backed by market data include:
- Improved Recruiting Efforts
- Employee Retention
- Promotion of Better Awareness of Compensation Strategies
- Potential for Improved Productivity
Clients that are interested in discussing their compensation plans and/or are located in the states mentioned above can reach out to their FrankAdvice HR Consultant to discuss respective pay transparency laws, salary range reports, and additional compensation planning resources.
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