The Point of No Return: Employers Are Being Forced to Disclose Salary Information to Applicants Due to New Laws

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There are many things to consider while searching for a job, but the most important one is: How much does the employee pay?

Employers may look at you adversely if you raise the issue of wages too early. If you don’t bring up the subject of pay, you run the danger of being underpaid—an ethereal piece of music and dance. Fortunately, a new wave of regulations compelling private corporations to provide pay information may stop this nonsense for good.

When it comes to hiring, C. Nicole Mason, CEO of the Institute for Women’s Policy Research, maintains that the employer has the upper hand in most cases.

The lack of knowledge about salary at a firm may put many workers, particularly women, at a disadvantage when negotiating, says Mason.

Companies should instead mention their wage ranges in the job description so that you can make an informed decision about whether or not the interview process is worth your time and effort before you begin it. There are benefits for current workers since they may utilize the information to make their compensation more equitable.

Public sector employees have enjoyed these benefits for a long time. New labor regulations, also referred to as payor salary-transparency laws or anti-secrecy laws, are now on their way to enforcing comparable norms in the private sector.

Eight cities or states have recently approved similar legislation, and others are expected to follow suit. The ripple effect may benefit you even if they don’t visit your state or area.

A law like this is long overdue to address concerns connected to the gender wage gap, Mason adds.

Bankruptcy, Security Clearances, and Employment

A security clearance is required for many jobs. You might have a security clearance if you’re in the military or work for the CIA, FBI, another government agency, or a private corporation that does business with the government.

If you file for bankruptcy, could you risk losing your security clearance? Probably not, and it’s possible that the opposite is true. A person with financial problems—particularly someone with a lot of debt—is at greater risk of being blackmailed, according to credit counselors for the military and the CIA. You can significantly reduce that risk by filing for bankruptcy and paying off your debts. BankruptcyHQ frequently works in your advantage rather than against you.

The Impact of Bankruptcy on Job Seekers

Your bankruptcy cannot be taken into account by any federal, state, or local government body when choosing whether or not to hire you. Private employers, on the other hand, are not bound by the same rules, and some people find that having a bankruptcy on their record haunts them.

A credit check is performed on many job seekers by private firms. The credit report will inform your employer of your bankruptcy. 

Those seeking employment that need them to deal with money, such as bookkeeping, accounting, payroll, and so on, face difficulties as a result of their bankruptcy filing.

While an employer needs your permission to do a credit check, if you decline, they may refuse to hire you. If you’re asked for this permission, think about being open about what the employer will find in your file. Being open and honest may offset the negative consequences of filing for bankruptcy.

Where can I find legislation requiring employers to make their salaries publicly available?

If California goes, so goes the rest of the country regarding paying transparency, as a common saying goes. California’s Equal Pay Act went into effect on January 1, 2018, prohibiting employers from asking for an applicant’s wage history and requiring corporations to offer a salary range to candidates upon request.

Following in the footsteps of the Golden State, the following states have implemented legislation requiring comparable pay transparency:

  • Equal Pay and Opportunity Act (ERA) in Washington, DC, in 2019
  • Equal Pay for Equal Work in Maryland in 2020
  • Pay Equity Act (Toledo) and Prohibited Salary Inquiry and Use (Cincinnati) (Cincinnati)
  • Colorado’s Equal Pay for Equal Work Act will take effect in 2021.
  • SB 293 will be in effect in Nevada by the year 2021. (unnamed)
  • HB 6380 will be signed into law in Connecticut in 2021. (unnamed)
  • Rhode Island: Equal Pay for Equal Work (Coming in 2023)

According to the National Law Review, New York and Massachusetts are reportedly considering legislation along these lines.

Notably, the federal Equal Pay Act, which prohibits wage discrimination based on gender, has been in force since 1963. This legislation has been adopted by several states as well.

Serious wage discrepancies continue almost six decades later.

According to the American Association of University Women’s newest pay equality study, “in 2020, women were paid only 83 cents for every $1 given to a male.” Racially disparate wages continue to widen. Last year, black males earned 75% of what white men rated, while black women earned 64% of what white women rated.

The gender wage gap narrowed marginally in 2020 is hardly anything to celebrate. Experts argue this is because the epidemic caused many women in low-wage occupations to be unemployed, which distorted the data.

This is what’s meant by pay transparency legislation.

Simply prohibiting discrimination in the workplace will not address the wage gap. Here comes the latest wave of pay transparency measures into action. This is a long-term effort to remedy long-standing imbalances in compensation.

There are two things that all laws have in common, even though they are all put up somewhat differently. To begin with, numerous jurisdictions have made it illegal to base an applicant’s wage offer on their previous employment history. To make matters worse, both job seekers and existing workers now can see the wage ranges associated with specific roles and positions inside a firm.

However, salary disclosure isn’t automatic in several states. Salary information is only available “upon request” in the states of California, Connecticut, Maryland, Rhode Island, and Washington. The conditions of Nevada and Colorado stand out. Companies in both states are required to share this information automatically. After a candidate has finished an interview, this is the procedure in Nevada. It begins earlier in Colorado. To post a job in Colorado, employers are required to include a pay range and a short explanation of the benefits package.

New pay-transparency legislation in Colorado, which went into effect in January, is one of the most sweeping and experimental of its type. Even national businesses that use remote recruiting must follow the same norms of openness. Earlier this year, an initial exclusion from remote job postings from major corporations stemmed from this rule.

“This role may be done anywhere except Colorado,” said a job posting from publicly-traded real estate business Realogy. Several other corporations, including Nike, Johnson & Johnson, and IBM, followed suit once the legislation went into force.

When Aaron Batilo from Colorado saw the pattern, he decided to do something about it. More than 160 firms that advertised job vacancies but excluded Coloradans from applying were exposed by him and his website, Colorado Excluded.

In addition, state authorities acted. An angry letter from Colorado’s labor director, Scott Moss, went out to foreign firms turning their backs on inhabitants of the state. According to his letter, according to his letter, as long as a firm has at least one employee based in Colorado, the state’s compensation disclosure laws apply to remote job listings.

Aside from Colorado’s pay equality statute, other attempts to increase compensation transparency have also been impacted.

Pay transparency in Buffer: a case study

A digital business co-founded by Joel Gascoigne in 2010 is Buffer’s CEO. At the time of this writing, Gascoigne’s salary is $290,000. And he doesn’t care whether anybody else knows.

Before the latest wave of salary transparency rules, Gascoigne began revealing wages internally with the permission of his workers in 2013. In addition, he devised a mechanism for standardizing Buffer’s pay scales. Later that year, once everyone had gotten used to it, he made a public spreadsheet with everyone’s first and last names, job titles, and salary.

The move drew a lot of attention from the media, making Buffer a household name. Workplace awards from publications such as Inc., Entrepreneur, and Quartz have recognized Buffer for its practices. Even today, Buffer may be more renowned for its social media management tools and services than its compensation transparency (or possibly its four-day workweek).

Hailley Griffis, the business’s public relations manager, first enticed her to the company because of its compensation transparency. After hearing about the company’s salary becoming public, she began searching for jobs right away. It took her until 2016 to obtain her first job at Buffer.

For her, it was a big part of the appeal of working at the corporation because of her lack of confidence in her ability to negotiate.

She explains that there is nothing worse than discovering that you are paid less than someone performing a comparable job. You’re earning less money than you were before because they bargained and you didn’t.

Griffis claims that salary transparency at Buffer has led to more open dialogue between employees regarding money in general. It’s common for employees at the organization to share financial advice.

Pay transparency measures of Buffer have a wider influence than just the firm. Buffer’s employees may be seen, including their titles, locations, and wages. According to Griffis, buffer’s open wage data is also being used by other organizations and job searchers. 

Using Buffer’s compensation formula, companies may know how much they should pay their employees, particularly in a remote setting. Having real-time data about job titles and pay gives job seekers an advantage when bargaining with other organizations.

Even if pay information is made public, it may not be enough.

Mason, a researcher with the Institute for Women’s Policy Research, thinks that wage disclosure regulations alone aren’t enough to address the gender and racial pay discrepancies. However, they constitute a crucial initial step in the process. When it comes to fixing an issue, firms must first recognize it. The real question is how much effort companies will put into correcting pay inequities once (or if) wage transparency regulations are put in place?

As Mason puts it, “We’re making a promise that no employer wants this type of wage gap, that it’s inadvertent.” Pay discrepancy, however, is a longstanding problem, and not all businesses are eager to rectify it. Even in places with new regulations, breaking the trend may be challenging.

Using Buffer as an example, let’s see. A voluntary disclosure policy was implemented that goes well beyond what is required by law at this time. In 2017, the business began publicly studying and disclosing data on gender wage gaps. According to the company’s own data, there was a 15 percent disparity between male and female earnings at Buffer in 2019. 

An increase of 5.5 percent has been observed for this year. Buffer’s staff is now more evenly split between men and women. Griffin claims that when Buffer began publishing the reports, it had no idea how to calculate equal pay. It took the firm years to improve its data collection and implement procedures that resulted in a smaller pay disparity.

Let’s use Buffer as an example: Transparency is a beginning point, not a solution, whether brought about by new legislation or by socially conscious CEOs acting alone. Pay transparency legislation, according to Mason, might lead to a “moment of crisis” for specific firms. Employers in other industries may be “pleasantly surprised” to learn that there isn’t much of a skills gap to bridge.

If firms view this as an opportunity rather than a punishment, “they can actually assist us all get to a better place,” she adds, “I believe.”

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