salary ranges are now required Statutory job advertisements in New York City, and human resource teams serving approximately 4 million private sector workers in the city, have spent the year preparing.
You have your work cut out for them reviewing their payrolls, making internal pay adjustments, revamping their applicant tracking systems, training managers on the changes and, perhaps most importantly, preparing for an onslaught of employee questions and concerns once salaries are phased out.
Broadly speaking, the intended consequence of such pay transparency laws is to enable job seekers to know how much a job will pay before they even apply, which economists and proponents say is key to finalizing the law racial and gender pay gaps.
But there are also a number of unintended consequences that can occur: It could create tension in the workplace, disgruntled employees could quit, companies could face legal and reputational risks, and companies could lose their competitive edge in a tight marketplace, to name a few few.
That’s why hiring experts say listing salary ranges is really just the beginning of the salary transparency effort.
In many ways, November 1st was really just the starting date for employers to begin their pay transparency efforts.
“It’s not a one-time job,” says Robert Boersma, vice president of operations at Talent.com, a recruitment platform. “It’s an ongoing job of continually training your managers to have these conversations and then communicating on a consistent basis how employees create value for your company and how the compensation components reflect that.”
Those conversations will inevitably lead to potential new hires as well as current employees, says Cassandra Rose, head of people at Fringe, a lifestyle benefits marketplace.
She’s eyeing two ways the law will affect her work in the coming months: changes in the inclusion of salary bands in advance, how many people are applying for their jobs, the types of candidates applying for their jobs, and feeling are candidates actually more able to discuss? pay for early job interviews?
And second, many people will be outfitted with their pay bands going into annual reviews and raises. Will they use salary range information to discuss a performance increase?
When companies explain not just what people are getting paid, but why, it could fuel a new wave of layoffs at an already turbulent time in the hiring market, says Tony Guadagni, senior principal of research at Gartner, the consulting firm.
Rose is pragmatic when it comes to balancing the well-intentioned consequences with the disruptive unintended ones. Salary transparency “helps people who are typically underrepresented and underpaid better move up the ladder, but creates another problem for those who feel they should be paid better, whether that’s true or false, and feel like they’re somewhere else should go. It could lead to high turnover, possibly for no good reason.”
As a result of its Pay Transparency Act, Colorado has seen an increase in job searches. However, it’s not entirely clear how many of these were people being pulled back into the workforce from the sidelines, or workers leaving old jobs for new ones.
If anything, workers may already be planning to quit and be more motivated to look seriously when armed with more salary information, Boersma adds.
As visible salary ranges become table poles, hiring managers must work harder to ensure job descriptions showcase all the perks, benefits, and great company culture that set them apart in the hiring market. This is especially important for smaller companies who cannot pay as competitively in their market as large companies.
To that end, Rose said the changes could cause some businesses to exit New York City if they can’t pay at the top of the market and they see a drop in qualified applicants in the region.
But moving doesn’t mean they escape future pay transparency laws that will also be introduced in California, Rhode Island and Washington state in 2023.
“Even if you think laws in New York City or Rhode Island or Colorado or California don’t apply to you, just know that these are the first of many to come,” she says. “They will put pressure on other places. I advise companies to move forward before it’s a requirement you have to compete against.”