New California Law Requires Job Postings to Include Salary Ranges
Thanks to a new salary transparency bill that Governor Gavin Newsom signed into law on Tuesday, pay ranges will soon be listed on job listings in California.
Nearly 200,000 businesses with 15 or more employees will have to begin posting wage ranges on advertisements for tasks that will be performed in the state when the law takes effect on January 1, 2023. With this law, California will be the most populous state where job postings must provide pay information. California is home to 19 million workers and some of the most significant businesses in the world, including Apple, Disney, Google, and Meta.
The measure, according to its proponents, will help close the gender and racial wage discrepancies.
America as a whole According to the Census Bureau, women make 82 cents for every dollar made by a man, and the disparity is even greater for many women of color.
Women in California make about 88 cents for every dollar earned by men, with the disparity growing for women of color. The National Partnership for Women and Families estimates that the pay gap costs women in the state a total of $87 billion annually.
According to Jessica Ramey Stender, the policy director and deputy legal director of Equal Rights Advocates, “women, and especially women of color, are actually being robbed of salaries every year.”
“That is money that could go to rent, food, diapers, education, retirement savings. So, the time has really come for robust pay equity legislation here in California and beyond.”
Stender believes the California law will lead other states and cities to follow.
More Transparency Beyond Salary Ranges
Along with requiring compensation ranges, the new rule mandates that employers of all sizes furnish employees with the salary range for the position they hold upon request. This means that more pay transparency will help everyone, not just job searchers. Current employees can see where their income ranks within their own company and bring up pay discrepancies to bargain or request an adjustment.
Last but not least, it mandates that businesses with 100 employees or more who are hired through third-party staffing agencies, who frequently take on time-based assignments as W-2 contractors, submit pay data reports for those employees, broken down by gender, race, and ethnicity, to the California Civil Rights Agency.
According to Stender, this “increasing component of the modern workforce” frequently consists of women and people of color who labor for less money than direct-hire employees while performing the same tasks. Employers may not be aware of occupational segregation, which can be discovered by reporting pay data depending on work and demographic background.
“We believe this data can help companies comply with equal pay and anti-discrimination laws and have a more equitable workplace,” Stender says.
Say a business learns from the data that 95% of the administrative staff, employed through a staffing agency, is made up of women, whereas 95% of the executive-level workforce, hired directly into the business, is made up of men. According to Stender, the requirement to gather that information “should be a major eye-opener that they have a prospective discrimination claim on their hands.
Companies with 100 or more direct-hire employees are already required by prior California law to disclose job and demographic information for those employees.
Although it won’t be mandatory, Stender thinks the state agency will probably publish aggregate pay statistics for transparency and accountability. Additionally, she claims that the initiative “provides enforcement agencies with data to better enforce equal pay and anti-discrimination laws” against non-compliant firms.
The Impact in California and Beyond
Other parts of the U.S. have similar legislation, and they are becoming more popular.
The Equal Pay for Equal Work Act of Colorado took effect in January 2021 and mandates that all job advertisements from employers provide the salary range. Despite a decline in job listings, preliminary data indicates that the shift helped more people find employment in the state.
After a preliminary interview, Nevada businesses are required to automatically give applicants the pay range, even if they haven’t specifically requested it. If a candidate requests it or if the company makes an offer, employers in Connecticut are required to disclose the pay range. Additionally, after making an offer and if the applicant requests it, companies in Washington are required to disclose the job’s minimum and maximum wage range.
It was originally scheduled to take effect in May, but New York City’s salary disclosure bill was postponed until November in large part owing to objections from business organizations.
A similar bill was approved by New York state legislators in June. Currently with Democratic Governor Kathy Hochul, it might take effect 270 days after being signed, or next year. Business organizations in New York opposed the measure and requested the governor to revise it, among other adjustments, to remove the requirement to publish employee benefits and make exceptions for work that can be performed remotely.
Stender does not think that the measure’s implementation date of January 1 will change now that it has been signed into law.
In order to prevent the law from taking effect in January, she argues, “there would have to be an effort to achieve that through new legislation, and that would not occur in the timescale needed.”
Furthermore, according to Stender, the new law has a significant impact outside of California because the state is home to several international and domestic corporations.
When a rule like this is passed, she adds, businesses with sites across the nation and abroad will occasionally update all of their policies to ensure they are compliant where it is necessary, and even in some places where it is not.
Employers are preparing for salary transparency, even if it’s not legally required
According to a Willis Towers Watson study of 388 business leaders conducted in June and July, 17% of organizations already report releasing pay range information in regions of the U.S. where it is not required by law. And even when it’s not required by law, the majority of organizations, 62%, plan to or are already thinking about reporting salary ranges in the future.
Today’s workers demand a higher level of pay transparency: according to a June Gartner poll of more than 3,600 employees, 66% of job seekers expect to see compensation in the job description.
According to Jamie Kohn, director of the Gartner HR practice, “Companies have had enough of warning that this is the way we’re moving,” she told CNBC Make It in August. “The majority of the businesses I speak with are aware of this trend and are working to determine the best approach to adopt it”.