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  • Writer's pictureMike Earp

Guide on How to Prepare for Pay Transparency Requirements

Updated: Jul 3

With Vermont passing pay equity, there are now 11 states who have enacted pay equity legislation, with another 13 states actively discussing passing pay equity.

Almost half the country will require pay transparency soon. This blog will get you up to speed on the legislation and provides a step-by-step guide to update your job descriptions/posts to comply.

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When I began my career, discussing pay was considered taboo except for the offer stage in a hiring process. Growing up, my parents were open to discussing many controversial and challenging topics, but one subject that was always off-limits was how much they earned in their professional jobs. 

Today, disclosing pay ranges for every job (aka pay transparency) is not only encouraged, but required by many states.

As a leading job description software company, we understand the importance of adapting to these changes.

This guide is designed to help recruiting and compensation professionals navigate the evolving landscape of pay transparency.

The Changing Landscape of Pay Transparency

Years ago, salary discussions were often shrouded in secrecy. Employees were discouraged from discussing their pay with their most trusted counter-parts, let alone openly with peers. 

Organizations maintained strict confidentiality around compensation. However, the rise of pay transparency laws in various states has changed the game.

These laws aim to promote fairness, reduce pay disparities, and empower employees with the knowledge needed to make informed career decisions.

Clip of NLRA requirement for pay transparency

Today it’s not uncommon for employees, especially younger generations, to share their pay with their peers.  In fact, there have been instances where entire teams or departments post their pay details on shared Excel documents for their own internal benchmarking practices. 

Chart from NBC showing workers who shared salary info by generation

Wage details have become more common in everyday work environments, and curiosity about pay continues to build. How prepared is your HR and leadership team for such transparency in your organization?

Pay Transparency Considerations for HR, Recruiting, and Compensation Professionals

1. Standardize Your Pay Practice: How is pay determined for roles in your organization?  Can you explain the process?  Is the pay setting process standardized for your organization?  Or are pay decisions made in different ways for different roles, by different people?  

 Organizations who lack a thoughtful and standardized benchmarking process for their roles are bound to have problems with inequity.  Especially in the new world of pay transparency requirements, organizations with sloppy compensation practices are exposed quickly.    

Establishing a structured pay program is the first step towards pay transparency success and building salary bands and compensation standards takes time and expertise.  If your organization has been getting by without a dedicated compensation professional, it might be time to call in a project-based compensation professional, or hire a full time inhouse compensation practitioner. 

Compensation is one of, if not the largest, expenses for organizations.  With that, even the small (1-2%) decisions that go into your compensation setting process have significant cost impacts at scale.  

Are you an HR professional looking for help structuring compensation for 50+ jobs?  Here are a couple highly regarded professionals we recommend to get you started:

2. Stay current on specific pay transparency requirements in the states where your organization operates.  

Here are a couple resources to help keep you updated on changes:

  • Subscribe to notifications or references state by state requirements through your local HR or national SHRM network.

Subscribe to your organization’s HR-payroll vendor updates such as Rippling, Paycom, ADP.

3. Job Description Clarity

Ensure job descriptions are clear and detailed, including information about salary ranges and compensation structures.  Internal vs External job descriptions enhance the candidate’s experience by being transparent about pay during the recruitment process, building trust and attracting top talent.

Manage your job descriptions in a standardized process, ensuring compliance and consistency.

Here are a couple of resources to help manage your job descriptions

Job Description Software: 

4. Market Benchmarking

Regularly benchmark your compensation against industry standards to ensure competitiveness and fairness. 

Conduct regular pay audits to identify and address any disparities within your organization.  Continuously evaluate the effectiveness of your pay transparency practices and make necessary adjustments based on feedback and evolving regulations.

5. Prepare your front line managers

Develop clear communication strategies to inform managers about your compensation philosophy and pay transparency practices. While managers do not need to know the details of the compensation process, they should know you have established a thoughtful approach to setting pay, and the decisions are always backed by benchmarking best-practices coupled with investments made into current market data.  

Remind managers how prevalent pay data is through online research.  Much like googling healthcare symptoms, compensation information found online can be full of misalignment and misinformation.  Given the high stakes of conversations about individual pay, it’s best to prepare your managers for compensation discussions with scenario-based or round-table sessions.

Ask your managers what questions they’ve faced from employees about pay.  Use their input for scenario-based discussions that are most realistic for your front line managers.  As a former front-line manager myself, I remember the compensation training I received was incredibly dry and non-relevant, covering foundational compensation terminology lessons such as the definition and application of salary ranges.  I often left those sessions uninspired and unprepared for the real questions employees have about their individual pay.  

Roundtables and scenario-based discussions establish a strategy to enable managers to handle common compensation questions one-on-one with employees.  Ensuring your managers have the confidence and knowledge to handle compensation questions when they come up, and they know when it’s time to bring in support from internal HR and compensation professionals.  

Here are a few great resources available to HR teams who are looking to prepare front-line managers for compensation discussions:

Bulletted list of common compensation discussion mistakes

Begin communicating your pay philosophy early and often 

Begin pay transparency discussions early in the recruitment process and maintain open communication with candidates throughout the hiring process.  Provide training sessions for HR and  recruiting professionals to ensure they understand your pay philosophy, the nuances of pay transparency and how to effectively communicate it.

The best case scenario is having new hires arrive with knowledge of your pay philosophy to avoid surprises and ensure fit from a compensation perspective. 

I was talking with an inspirational recruiting leader at a non-profit recently.  She makes it a priority to ensure candidates know their organization pays “under market”.  However, I remember her two key strategies to hire great people into the organization and she is hiring at scale, with great success in highly competitive roles (frontline workers).    

  1. Intentional about the target hiring audience. The nonprofit organization hires frontline employees to care for the local disabled community.   As a result, they actively seek restaurant workers who are great with people, and who are burned out working late nights and weekends.  

  1. Defining clear value around pay philosophy.  The nonprofit recruiters are trained to communicate the organization's pay philosophy, keeping total compensation in mind:  “Although we don’t pay as much as you make at the restaurant; you’ll be working much better hours, in an environment that makes a real difference for people in need”.  

The shift towards pay transparency presents both challenges and opportunities for HR, recruiting, and compensation professionals. By embracing this new era with proactive strategies and tools, your organization can foster a more attractive workplace. 

Mosh JD job description software is designed to support you in this journey, ensuring compliance, consistency, and clarity in all your job descriptions. Contact us today to learn more about how we can help you succeed in the evolving landscape of pay transparency.



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