This Salary Mistake Could Cost Your Business $250,000.
Within the U.S., salary discussions remain an unpopular topic. It’s time to stop talking about the subject can cost you millions of dollars of penalties.
In 2023, the city’s salary transparency law came into effect. Other states, like California and California, are following the same pattern with similar regulations. While these laws may not be affecting you yet, it is important to be prepared for any possible changes as the trend towards transparency in pay is spreading across the nation.
We’ll discuss two important concerns: how to be sure that you stay aware of the new laws and how to address any employee conflict before it becomes a problem.
What is pay transparency? The most important aspect of laws like the NYC and California laws is that job advertisements should include the minimum, and the maximum amount employers will pay for the job. According to the document of guidance to the NYC law, employers are required to offer the “good faith salary range for every job, promotion, and transfer opportunity” that they publically announce. This California law goes even further, obligating employers to provide the pay ranges of current employees on their request.
Pay ranges are not able to be unlimited. A list that includes words such as “$15/hr. and over” or “$ 50,000 plus annually” is prohibited, whereas “$17.00 to $21.00” might be acceptable. If the salary is set and cannot be adjusted, declaring “$15 per hour” would be fine.
The new law applies to all media. The NYC guideline covers “postings on internal bulletin boards, internet advertisements, printed flyers distributed at job fairs, and newspaper advertisements.” Be aware that even one employee working or living in NYC could be subject to the new rules.
How do you stay on top of the game (and remain competitive)
You might wonder what punishment is for not complying. In NYC, the penalty could be punished up to $250,000, not including the cost and hassle of a possible discrimination suit.
Here are some strategies you can implement to ensure compliance and preserve your business’s edge in the market.
1. Build a reasonable range.
Many jobs that require similar tasks can be extremely different in terms of salary. According to Glassdoor, an basic software engineer in NYC can earn between $71,000 and $169,000. Employers, what do you do to bridge this massive gap?
It all boils down to that vague wording about the “good faith” range. Evan Alberhasky, an attorney and employment specialist with Stanton Law, believes that courts could provide further guidelines shortly. In the meantime, it is your responsibility to determine what is reasonable.
“The burden will be on the employer,” Alberhasky said.
Creating a salary range using national or regional studies could be a good starting point. Other aspects, like the kind of business and the years of experience of a candidate, as well as their education and skills, can affect how much an employee earns.
2. Utilize your network.
The law stipulates that all advertisements for jobs posted on the internet and those published within the company on message boards must contain an estimated salary. There is a simple solution for certain companies to refrain from posting the job.
While many private firms have managers who must conduct a search on the internet for applicants, however, there isn’t a law that obliges them to announce every job opening. If you are looking for ways to attract employees, employers should think about methods different from the traditional job board. Many employers use informal ways to locate applicants, and there’s an excellent possibility that someone within your circle may know about the perfect candidate. Most businesses also use hiring agencies and recruiters to help find appropriate candidates.
3. Remember veteran employees.
Certain employees with experience could be surprised when they learn the sums they earn for young people. The company’s morale could be shattered, in particular, if kids who are fresh out of high school are paid more than employees who have been faithful for a long time.
“There will inevitably be tension,” Alberhasky warns.
On the other hand, the requirements for entry-level positions in your field might have increased dramatically in recent times. Some jobs that once required only a bachelor’s degree today require higher academic qualifications or a long period of work prior experience. In this scenario, Alberhasky suggests being open with your employees regarding your reasons. The current employees may be interested in knowing what they can do to get a better pay raise.
On the final day, it might be advisable to increase the compensation of employees currently employed. A recent study by Willis Towers Watson discovered that most U.S. employers are budgeting for higher pay raises in 2023 than the previous year.
Numbers don’t lie. Be aware of the best way to determine your employee turnover rate. It is a vital number to have in mind for preventing the silent departure of employees.
Preparation is key
In the end, transparency in pay aims to reduce unfair pay gaps. Research consistently shows that women and those of color receive lower than their counterparts for similar work. They often do not make a case for increases or get raises even if they have to. The new law is designed to even the playing field by increasing access to important salary data.
Even if the new rules do not apply to your state, it may be beneficial to take a proactive approach. Alberhasky believes businesses should begin planning sooner rather than later since it may take a few years or more for a large company to review how they pay their employees.
“Employers need to understand that this is something they’ll need to deal with at one point or another,” he added.
In these days of labor market slack and more frequent turnover, job seekers are paying closer focus to which employers offer the most beneficial employee benefits. If you still need to be made aware of doing so, it’s the perfect time to refresh the basics of all compensation packages.