Pay Transparency Laws & What You Should Be Doing

In the past, employees negotiating their salaries had to guess at market compensation. Now, however, the information is public – employers must list the pay scale for job postings in California, Washington, Colorado, and New York. The purpose of pay transparency laws is to reduce the gender pay gap, which should be happening. So what else is going on?

1. Some companies are posting huge pay ranges. By listing total comp and including their top line, they may be trying to preserve flexibility and compete with other companies.

You can still glean information even with broad salary ranges. The chief economist at ZipRecruiter says when looking at a tech company’s posts, you can see for example that “compensation might average $300,000 for software engineers across the company, with junior hires earning $100,000, and a small group of employees recruited for specialized skill sets or retainer for building high-value products earning substantially more, in the $600,000 to $1 million range.”

2. Location is a factor accounting for the wide comp range. Cost of living differs. Remote work is still “a gray area.” “Given that many employers index wages to local labor market conditions, it is possible — if not likely — that the salary ranges for remote jobs will be meaningfully larger than for onsite roles” said a LinkedIn economist.

3. Star performers may end up being paid less. NYT reports “some forms of pay transparency seem to make pay not only more fair, but also more flat, with a smaller gap between low and high performers.” The result could be to “dampen[] the performance-based incentives.” As a result, “to avoid the trap of paying everyone the same thing regardless of performance, or shifting to less transparent systems, … companies need to figure out how to assess performance and explain differences in pay.”

4. Now that pay ranges are transparent, how does that affect your pay negotiations? The chief economist at ZipRecruiter says even a broad compensation range can be helpful because you can focus upfront on the jobs you want. But after engaging with companies you’re interested in, don’t overdo your ask warns Jayne Mattson, a career coach. You still need to know what your own value is in the market, if your skills are relevant, if you’ve solved problems the company faces, and if you can convey your worth in interviews.

NYT gives a host of suggestions when asking for a raise: think from the boss’s perspective and rehearse your pitch, which should explain why you are a rare employee, include your plan for what you will be working on, and appeal to equality (it’s hard to argue against equity!). After the pitch, share your talking points because your boss will need to make the pitch to their managers, and you want to help your boss do it well. Finally, even if your request is denied, understand you are planting the seed for future discussions.

I have found negotiations more likely to succeed if you say at the outset that you want to stay (or, if you are interviewing, that you are very interested because of [specific reasons]). That way you keep the conversation positive, and your manager will feel less defensive. I like this advice of a go-getter who successfully negotiated her salary: “The main thing that worked for me in my career was to always be open to new opportunities. You’ll either land an exciting new role with a big pay bump and can make a move, or you might end up with an offer that you can bring back to your current company and say, ‘This is what I’m worth in the market, but I love working here so let’s talk about my compensation.'”