Feb 17, 2022 - Economy & Business

Pay transparency law could see movement in California

Illustration of glasses on pile of money

Illustration: Eniola Odetunde/Axios

A Democratic state senator in California introduced a bill Thursday that would require employers to disclose salary ranges for open positions, and publicly report employee and contractor pay data.

Why it matters: Pay transparency laws are increasingly seen by equal pay advocates as the next key policy in closing racial and gender pay gaps.

  • It means the next time you go looking for a job you might know how much it pays — for real — ahead of time.
  • A similar law went into effect in Colorado last year, and is about to take effect in New York City in May.
  • California already requires employers to disclose salary ranges, but only if asked by a prospective candidate.
  • "I think the tide is turning in terms of support for stronger pay equity laws," said Jessica Stender, a policy director for Equal Rights Advocates, one of four advocacy groups that worked on this bill, introduced by Monique Limón (D) in the Senate and coauthored by Sen. Nancy Skinner and Assemblymember Cristina Garcia.
  • In the UK employers have had to disclose pay disparity data and it has helped narrow gaps, Stender said.

The big picture: The rise of remote work means that local laws, particularly coming from places like NYC and California, can have national implications.

  • After Colorado's transparency law went into affect, companies who posted remote jobs simply said residents of Colorado could not apply. But large employers — like ones based in NY and Calif. — likely won't be able to do this due to the millions of in-demand workers in these two states.

State of play: While these laws are still new, there is evidence that pay transparency does narrow wage gaps from the public sector. The gender pay gap for federal workers, who can tap publicly available salary information, was 93%, according to a GAO report from 2017. For U.S. workers overall, it's 82%.

  • Black, hispanic and Native American women face wider gaps.
  • Laws banning employers from asking job candidates for salary history have already changed the hiring process for many women, in complicated ways.

The other side: Companies have argued it's burdensome and complicated to post pay ranges.

What's next: It's likely that business groups will oppose this new bill, as they opposed previous pay equity laws in the state.

  • Companies in New York are already scrambling to get into shape ahead of the city's law taking affect in May.
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