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Now that California has passed pay transparency legislation, following Colorado’s lead, more and more employers will be impacted. 

Employers need to consider how they will handle this new reality. Some employers will wait until they have no choice. While that is a valid business decision, embracing transparency now may provide the advantage of being an employer of choice, where the best employees want to work. If you want to move forward with transparency, the steps to arrive there are important, and this Employers Council article can help you get started.

After the leadership team has reached a consensus on how to move forward, there are two other steps you will want to take:

• Conduct a pay audit to determine whether you have employees who are underpaid and whether that is based on race or gender. Employers can conduct an audit on their own or get help with one. Employers Council can perform audits for organizations. You can also contact us to help you determine the best approach.

• Set guidelines for negotiation for new hires. Pay compression is going to be much trickier for employers in an era of pay transparency. State statutes make it unlawful to pay a new employee more than a current employee performing the same duties. Retention efforts can be severely impacted by compression as well. Managers with free rein to set starting pay may need to be under stricter controls when offering a new employee an attractive starting salary. You will need an up-to-date compensation plan, and this is another area where employers can receive assistance from Employers Council.

Transparency can be a significant change in an employer’s pay practices. If you need assistance or have questions, please email the Member Experience Team.