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Salary Transparency

Salary Transparency: What is the issue?

Salary Transparency is a practice of disclosing salary and compensation publicly. These policies are intended to fight pay disparities and discriminatory compensation practices that most often impact women and other underserved groups. They also can contribute to a positive and trusting work environment.

Salary transparency can also save time for job seekers and employers, by helping candidates weed out jobs — and not spend valuable time applying, researching, and interviewing for that job — that do not meet their financial expectations or needs.

Why do nonprofits care?

This issue is relevant for nonprofits in the same way it is relevant for all employers: it can avoid discriminatory pay practices and it can save time on recruitment and interviews.

Nonprofits could face an added pressure to make salaries transparent. Nonprofit organizations are often held to a higher standard for promoting equity. Being transparent with salaries might be a policy promoted by leadership, funders, clients, and/or staff. From Nonprofit Quarterly: “Supporters and leaders of nonprofits don’t want their organizations to contribute to or exemplify the problem of income inequality, wittingly or unwittingly.”

The challenges are also similar across various sectors. Employers might worry that salaries are too low to attract good candidates in a job posting (and especially for nonprofits who want the chance to wow candidates with their mission, benefits, or great colleagues, rather than just a salary). Employers also might have to address the issue with current staff if the salaries being offered new hires are out of alignment with current salaries.

Is there legislation about salary transparency?

TNPA believes that regardless of the presence of a mandate from legislation, the nonprofit sector should set a positive example with greater salary transparency.

That said, yes, a number of states have enacted laws that require employers to share salary ranges and benefits packages in their listing for open positions. These are: CA, CO, CT, MD, NV, and RI. The focus of most legislation is on the private sector.

The legislation usually addresses one or two levels:

  • Requiring the salary range and benefits be provided clearly in job postings.
  • Requiring the salary range and benefits be provided to employees upon request when considering changing jobs within an organization.

Ultimately, these policies could also include transparency around the salaries of current employees.

What are the variations in these laws? 

Some states are making the law applicable only to employers of a certain size. For example, the Colorado law applies to all employers, regardless of the number of employees, while the Washington State law applies to employers with 15 employees or more.

In Colorado, in addition to including pay ranges in job postings, employers must also formally notify employees within the organization of internal opportunities for promotion on the day the opening occurs.

In California, on September 27, 2022, Governor Gavin Newsom signed a law that will go into effect January 1, 2023. This law expands state pay data requirements to include contracted employees and requires all employers — based in or hiring in the state — to post salary ranges on all job listings. It also requires a private employer that has 100 or more employees to submit a pay data report to the state’s Department of Fair Employment and Housing. Among the items included in the pay data report will be information on median and mean hourly pay rates for each combination of race, ethnicity, and sex within each job category.

In addition to states, some local jurisdictions are taking up the issue of pay transparency. A New York City pay transparency law went into effect earlier in 2022, requiring employers to include so-called “good faith” estimates of salary ranges in job advertisements, as well as to internal candidates interested in promotions and transfers within the organization. The law also requires employers to post maximum and minimum ranges, not simply an hourly rate or a maximum per year salary.

What to keep an eye on?

Salary transparency is getting a lot of buzz and there appears to be momentum for several more states to enact related laws in the coming years.

What are “salary history bans”?

Also related to the interview and recruitment process and determining the pay of new employees, a number of states prohibit employers from asking about a job candidate’s salary history. These laws preclude employers from relying on pay history to set compensation. This forces employers to pay candidates based on the value of the work, rather than simply what that particular candidate or employee was paid in the past. Given the rising awareness of pay discrimination, salary history bans allow employees who might have suffered that type of discrimination to break free of it with a new employer.

These states have enacted salary history bans as of September 30, 2022: AL, CA, CO, CT, DE, HI, IL, MA, MD, ME, MO, NV, NJ, OR, RI, VT, and WA. A running list of states and localities that have outlawed salary history questions can be found here.

Read more…

TNPA Blog and Webinar: Equitable Compensation: From Strategy to Equity — Highlights from a conversation

Article: Pros and cons of salary transparency

Article: How the BBC Women Are Working Toward Equal Pay

Read more about specific legislation

TNPA follows state legislation relevant to the nonprofit sector.

Article: California Passes Law Requiring Companies to Post Salary Ranges on Job Listings

New York City Salary Transparency Fact Sheet. Starting November 1, 2022, employers advertising jobs in New York City must include a good faith salary range for every job, promotion, and transfer opportunity advertised.

Article: New York State Businesses Brace for Pay Transparency Rules

A List of States and Localities that have Outlawed Salary History Questions

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