The labor market continues to evolve as it adapts to economic and workplace changes. One of the most relevant topics today relates to pay transparency.
On the one hand, companies are implementing pay transparency practices to comply with new laws across a growing number of states. However, aside from regulatory requirements, companies are responding to labor market demands by modernizing the workplace to continue to attract and retain top talent.
The demand for greater pay transparency is ultimately a push to implement and improve equal pay practices. By reducing wage gaps for underrepresented groups, companies can create a more equitable workplace and better align with employee interests.
California passing the Equal Pay Act, requiring companies with more than 15 employees to disclose pay beginning 2023, follows a national trend of similar laws including Colorado, Rhode Island, Washington, and New York City, to name a few. While these laws place a large focus on the employee workforce, they often include or relate to contract labor as well.
With the laws requiring companies to disclose pay ranges, it will be crucial for organizations to audit and review their systems and processes to ensure they are adhering to the new compliance standards. To ensure the accuracy of publicized pay ranges, companies will need access to real-time market data to make equitable offers to attract talent from a labor market that still has some volatility.
This will enable compliance while minimizing the risk of pay compression, which happens when there is minimal difference in pay between tenured employees and new hires despite differences in their respective knowledge, skills, experience, or abilities. This can lead to lower morale and higher turnover.
To mitigate this risk, companies can leverage real-time market rates to assess what criteria influence where applicants and current employees fit within established pay ranges.
With these new pay transparency laws, job seekers will now have visibility into compensation earlier in the process, enabling them to assess whether a position is a viable financial option for them. If companies act before they are required to by law, or in states where pay transparency laws have yet to be passed, they can demonstrate a commitment to creating an equitable workplace and build trust with job seekers.
In addition to compliance, publishing salary ranges for open positions creates an opportunity to elevate the perceived value of your workforce. With real-time talent and market data, organizations can target job seeker audiences with more precision by aligning pay ranges to key attributes, such as skills and experience level. Rather than make an offer at the lower end of a broader pay range, companies can extend offers at the higher end of a more targeted range to the open position, strengthening the applicant pool and boosting overall workforce morale.
Whether for compliance or to meet the growing demands of an evolving workforce, companies have an opportunity to implement data-driven strategies to align business needs with workforce interests in ways that will positively impact growth today and set it up for success tomorrow.
If you’re interested in learning more about how Magnit is helping organizations implement winning contingent workforce programs globally, please contact a Magnit representative at email@example.com.
Disclaimer: The content in this blog post is for informational purposes only and cannot be construed as specific legal advice or as a substitute for legal advice. The blog post reflects the opinion of Magnit and is not to be construed as legal solutions and positions. Contact an attorney for specific advice and guidance for specific issues or questions.