On November 18, 2024, New Jersey Governor Phil Murphy signed into law a pay transparency mandate, requiring employers with more than 10 workers to disclose a compensation range and benefits in job postings. It also requires employers to disclose promotional opportunities to current employees.
The law, which goes into effect in June 2025, carries a $300 fine for first-time offenders and $600 for subsequent offenses.
In recent years, several jurisdictions have implemented pay transparency laws aimed at addressing wage gaps and promoting fair compensation practices, while other jurisdictions are in the process of passing these mandates.
Similar to New Jersey, these laws generally require employers to disclose information about salary ranges, either in job postings or during the recruitment process.
Pay transparency laws often share core principles. Some of the most notable examples include:
California: As of January 1, 2018, California’s Equal Pay Act mandates employers to provide a pay scale for a position to an applicant upon reasonable request after an initial interview.
Colorado: Effective January 1, 2021, the Equal Pay for Equal Work Act requires employers to disclose the pay range in every job posting and notify current employees of promotional opportunities.
New York City: Starting in November 2022, NYC’s salary transparency law obliges employers with four or more employees to disclose the salary range in job advertisements.
Washington: As of January 1, 2023, Washington State law requires employers with 15 or more employees to include salary ranges and a general description of benefits in all job advertisements.
Implications for Businesses
While the specifics can vary, these laws generally mean that businesses must be prepared to provide detailed information about compensation upfront.
Failure to comply can result in fines and reputational damage. At a practical level, companies need to audit their compensation structures and establish consistent and fair pay practices to avoid legal complications.
What Businesses Should Do
Conducting Pay Audits: Regularly reviewing and adjusting compensation practices ensures compliance and fairness. This can help identify and rectify any unintentional disparities.
Training Management: Ensuring that those involved in hiring and promotion are well-versed in the new laws and understand the importance of transparent communication.
Adjusting Job Postings: Clearly outlining salary ranges and benefits in job advertisements to meet legislative requirements.
Benefits of Pay Transparency
Enhanced Trust and Morale: Transparent pay practices foster a culture of trust. Employees are more likely to believe they are being compensated fairly, which boosts morale and reduces turnover.
Attracting Top Talent
Job seekers increasingly prioritize companies that demonstrate fairness and transparency. By providing clear compensation information, businesses can attract and retain high-quality candidates who value openness.
Reducing Wage Gaps
Transparency helps in addressing systemic wage disparities. When pay ranges are openly communicated, it becomes harder to justify unjustified pay differences, thereby promoting equity across the organization.
Improved Company Reputation
Companies that are perceived as fair and transparent in their compensation practices can enhance their brand reputation, making them more attractive not only to potential employees but also to customers and investors.
Pay transparency laws are reshaping the employment landscape, urging businesses to adopt fair and open compensation practices. While these laws require adjustments and may initially seem challenging, they present significant benefits.
By embracing transparency, companies can build trust, attract top talent, and promote equity, all of which contribute to a more positive and productive workplace. As the movement towards pay transparency continues to gain momentum, businesses that proactively align with these principles will be well-positioned for success in an evolving marketplace.
Marzano Human Resources Consulting works with businesses of all sizes in addressing pay issues, which include the market pricing of jobs, pay equity analyses and audits, along with the creation of career ladders. Consider reaching out for a no-cost initial consultation.