Compensation expert: Washington firms could use new transparent pay law to their advantage

When the calendar turns to 2023, Washington will have a new pay transparency law requiring employers to list salary information in job listings takes effect. According to one expert, it could be a good thing if used right.
The law was passed in 2022 with the aim of helping job seekers know more details before applying for positions. Tanya Jansen, the co-founder of the compensation consultancy Beqom, said that in order to build trust with employees, companies should scrap a culture of secrecy around compensation.
Studies conducted by the company have found that 29 percent of employees feel they are not paid fairly and 24 percent of employees say they think companies are deliberately secretive around salary and bonus information.
“When employees believe they are paid fairly, they are more likely to form stronger relationships with both their leaders and their colleagues because they’re comfortable engaging in conversation around pay and other difficult topics,” Jansen said to The Center Square in an email.
For employers to benefit from the pay transparency law, Beqom claims they need to include a realistic salary range in their job opening descriptions. She cautions against companies trying to find loopholes around the law by including salary ranges so large that employees could not reasonably gauge the pay they could expect, as that will simply discourage many applicants.
Pay transparency laws have already been enacted in Colorado and New York state, with California to enact a similar law on Jan 1, 2023. After its law went into effect in early 2021, Colorado saw a 1.5 percent boost in workforce participation rate compared to neighboring Utah, which does not have a similar legislation, according to a report from Recruitonomics.
Jansen noted that since pay transparency laws have gone into effect in New York state and Colorado, job seekers have been better able to make more informed decisions on which positions and workplaces to apply for, since they can access pay information before receiving an offer.
Another potential positive for employees as a result of the upcoming law is an increase in salary. Some workplaces may increase salaries to try to attract new talent and balance out salaries between new employees and tenured employees. However, Jansen noted that not every company can afford to do so.
Employers will also have to be prepared to address employee concerns such as fair pay and gender pay gaps.
“Considering more than half (60 percent) of Americans say they’d leave their current workplace for increased pay transparency, this new legislation is more likely to spark increased conversations around employers’ pay strategies and compensation decisions,” Jansen said.


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