Momentum builds for salary transparency
New York City will soon require employers to supply a salary range when they're advertising a position — the biggest step yet in the growing but controversial movement for pay transparency.
Why it matters: Laws like New York's aim to give workers, particularly women and people of color, more power in job negotiations. But the rise in remote work is throwing a wrench into the effort.
Driving the news: Under the new law, which takes effect in May, any employer trying to fill a position based in New York City will have to advertise the minimum and maximum salary.
- New York's role as the nation's financial capital and business bellwether puts the pay transparency movement front and center.
- "I’d say it’s a game changer," Tauseef Rahman, a partner at the Mercer consulting firm who specializes in pay equity and transparency, tells Axios.
The big picture: While pay discrimination is illegal everywhere, and more states are banning the practice of asking candidates' salary histories, employers still have a big upper hand in compensation negotiations, and it's very hard for job candidates to find out salary information up front.
- Among the goals: to ensure that women and people of color don't get offered substantially lower salaries, as has happened historically.
- For employers, the rule can help stave off pay discrimination claims. For workers, there's comfort in knowing that your income is in line with what the boss is offering others.
- "As a practical matter, pay transparency laws provide prospective employees with more clarity around how lucrative a potential position is before they get too deep into the recruitment process," says Danielle J. Moss, a partner in the labor law practice of Gibson Dunn.
Where it stands: At least eight states and several cities have laws on pay transparency, but most are weaker than New York City's.
- A handful of private employers have taken matters into their own hands. Whole Foods lets employees look up how much their co-workers make, and a number of tech companies — like Buffer, GitLab and Whereby — post formulas about how salaries are derived.
Yes, but: Remote work can give employers an easy way to avoid localized pay-transparency laws, at least for some positions.
- Colorado's strictest-in-the-nation law forces employers of all sizes to post pay information for all jobs advertised, even if they're for remote positions that could potentially be performed in Colorado.
- But experts say that's actually had a chilling effect, prompting companies to pull their listings from the state.
- "An employer would say, this position is eligible to work remotely except for in the state of Colorado," says Rahman of Mercer.
There are other problems, too. Employee compensation isn't always an exact or one-size-fits-all science — there can be legitimate reasons why star performers or people with unusual backgrounds get outlier salaries.
- "If an employer is posting a first of its kind or a unique position, it may not lend itself to a pay band or salary range that can be disclosed," says Moss.
- Plus, pay transparency laws can create confusion or headaches for multi-state employers.
The bottom line: With states like Massachusetts and South Carolina now considering pay transparency, the trend is likely to continue. But we're a long way from Norway, where everyone's salary is public information.