Pay transparency is increasingly becoming a business requirement. Many states require job postings to include salary ranges, and state laws mandating pay transparency are only expanding. Due to the increasing requirements concerning pay transparency, employers need to not only be aware of their duties under pay transparency laws but also move toward practices that embrace them. As a result, employers must recognize the most common myths around pay transparency that cause companies to object to these policies.
A prevalent belief is that many employers have is that if they post salary ranges in job listings, applicants will always ask for the maximum salary in the range. However, job applicants typically share their pay expectations independent of the posted pay range. Even if they ask for the top of the pay range, recruiters can easily explain how the posted range reflects an intent to foster growth over time based on the job’s scope and the skills necessary to fulfill the position’s requirements. One way to avoid this potential issue is to include a statement in the job posting explaining that the salary range represents estimates based on the typical candidates hired, and that various factors may reflect the actual salary offered for the position.
Another common myth circulating among employers is that competing companies will use published salary ranges to “steal” talented employees. However, the reality is that companies in the same industry likely already know your average salary ranges. All employers collect this information informally from rejected offers, counteroffers, and discussions with applicants.
Furthermore, a salary range does not indicate how quickly individuals move through that range, how performance metrics affect pay increases, or details about your benefits package.
Employers also worry that current employees will see the postings and become disgruntled with their own pay rates. Although this situation very well may occur, it can be a positive experience. Conversations with employees about pay rates may prompt companies to address true pay equity issues. Additionally, pay transparency can build trust between employers and employees. If employers explain to employees how pay ranges work and what they must do to improve their salaries within that range, everyone may be happier.
The reality is that pay transparency can have numerous positive effects for a company. Transparency can improve recruiting efforts, as job search engines give higher priority to job postings that include salary information. Furthermore, posting salary rates can make employers aware if they are paying employees inconsistently or well below the industry market rate. As a result, transparency can be critical in correcting misalignments in pay, which improves fairness and retention.
When implementing pay transparency policies, employers should first review job descriptions, salary ranges, and other details before posting jobs with salary information. All recruiters and managers should receive training so that they can fully explain salary ranges to prospective and current employees. Finally, employees should have clear knowledge about how they can move through the salary range for their position.
HBL has experience in all areas of benefits and employment law, offering a comprehensive solution to all your business benefits and HR/employment needs. We help ensure you are in compliance with the complex requirements of ERISA and the IRS code, as well as those laws that impact you and your employees. Together, we reduce your exposure to potential legal or financial penalties. Learn more by calling 470-571-1007.
Hall Benefits Law, LLC
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