California and New York City are now two of the newest jurisdictions of only a handful that currently require pay transparency laws. [1] According to the Pew Research Center, women earn, on average, 84 percent of men’s wages for the same role. The Center also reports that average hourly wages for Black and Latino men lag behind the hourly pay of white men. Further, the U.S. Census Bureau reports that the wage gap for women of color is even more significant than that of white women. Pay transparency laws intend to address this disparity.

What The New Laws Do

Knowing what the pay transparency laws in California and New York require is crucial towards reaping the benefits. Not all businesses will comply right away, and as they learn more about the rules their level of compliance will improve over time. In other words, businesses may need help from recruiters, career coaches, candidates and employees on achieving accountability.

We have to help hold businesses accountable.

Here are a few of the ways these new laws change the landscape for job seekers and current employees looking for career advancement.

California

With California’s high concentration of tech companies, professionals in information technology, data science, artificial intelligence, machine learning, advanced analytics, and programming will likely reap specific benefits from the state’s new pay transparency law. While California already had some regulations in place meant to target pay gaps, the new law broadens the scope and requirements for employers in the state.

Companies with at least 15 employees are now required to include a pay scale in their job listings. This allows job seekers and current employees seeking promotional opportunities to be informed about pay before applying for the position.

Larger companies with at least 100 employees are required to create a pay data report each year and submit it to the Department of Fair Employment and Housing. According to its website: “The mission of the CRD is to protect the people of California from unlawful discrimination in employment, housing, businesses, and state-funded programs, and from bias-motivated violence and human trafficking.”[2] These reports must include each position’s mean and median pay details for sex, ethnicity, and race.

Penalties for violating the reporting requirement in the new law are minimal and not likely to inspire full compliance from every employer. Companies will be fined $100 for each employee omitted from the annual report. It is yet not clear if some companies will elect to take the fine (as cost of business) over choosing compliance.

New York City

As of November 1, 2022, New York City requires companies to list minimum and maximum wages in their job postings. In addition, the posted hourly wage or annual salary must represent a good faith estimate or range that the employer legitimately feels they are willing to pay an employee for that role.

New York City’s pay transparency law has stricter rules than California’s. Any company with four or more employees is required to comply with New York City’s new law. Owners of the business count toward this total. Fines for noncompliance can reach $250,000. [3]

The New York State legislature has also passed legislation which has yet to be signed by the governor.

There’s More Work to Do

State legislation and government oversight are good first steps toward equal pay and inclusivity. Creating a foundation that supports pay transparency will move the needle in the right direction and make efforts toward wage equality more commonplace. However, forced inclusion and transparency can only go so far. Significant improvements in the wage gap may require companies to undergo a cultural shift that allows them to revise their core policies in more equitable ways.

The fact is that people in the process of a career transition or those interested in career advancement value transparency from their current or potential employers. Companies should see this as a win-win. Employer transparency breeds an environment of trust, which is a valuable tool in creating a healthy company culture. Employees who feel informed, involved, and respected perform better.

One of the ways we know this is that during one study performed by Emilian Huet-Vaughn, a professor at Middlebury College the researchers paid students for a data entry tasks. There were two groups of students. Each group performed the tasks in two rounds. At the end of the first round, one group was provided earnings and performance information. The other group was not provided with any information on earnings or performance. The study showed that in the second round of data entry, the group with information on performance and earnings performed better than the group without that information. [4] [5]

Studies like Huet-Vaughn's tell us that performance and transparency are connected. In fact, transparency seems to be at least part of what drives performance at work! When we're supplied with this type of information before a task that can lead to better results. The study I just described shows how providing some extra insight can lead to better productivity.

Going Above + Beyond

So, how can companies interested in leading the charge go above and beyond the California and New York requirements? Employers who offer complete pay transparency have had positive feedback from their workers. So-called “complete” means that no salary or pay rate is private, including that of upper management and C-Suite executives. This completely open way of doing business does a lot to inspire upward movement and career advancement goals for employees. Employees can see what their pay could be if they work toward promotional opportunities within the company.

Employers focused on taking a proactive approach to eliminate the pay gap can use data science to their advantage by compiling their own data for in-house pay analysis. Each employee’s pay rate compared to their gender, race, and ethnicity can be analyzed to identify any unintentional or intentional bias. To take it a step further, companies can also analyze age and disability status data, as ageism and ableism can contribute to pay disparity, too.

Salary and hourly rates should reflect the scope and market value of the position, which eliminates subjective (and potentially discriminatory) determinants of pay. By using an objective measure, companies can improve the chances that each employee receives a fair salary.

Researching and Negotiating Your Salary

Even armed with the knowledge of these new laws involving pay transparency, salary negotiations and discussions can be intimidating. As a professional career counselor, I show my clients how to approach these conversations with confidence. My specific expertise involves professionals entering or leveling up in data science, machine learning, and artificial intelligence, and advanced analytics.

In previous articles, I’ve written about ways to revolutionize your salary research, why employers should pay their interns, and how to prepare for salary negotiations, with a specific article dedicated to data scientists.

I am hopeful that the new laws in California and New York will diminish the pay gap, but I don’t believe this is the final step. Pay transparency laws lay the groundwork for true inclusivity and inspire change on a level that will create meaningful advances in equality. Until then, I help my clients understand how and feel empowered to negotiate for a fair wage.

References

[1] Colorado, Connecticut, Maryland, and Washing have some version of pay transparency legislation. Munk, C. W. (2022, October 28). How the pay transparency movement’s success will change the way jobs are listed. CNBC. https://www.cnbc.com/2022/10/28/how-the-pay-transparency-movements-success-will-change-job-listings.html

[2] State of California. (n.d.). CRD. Calcivilrights.ca.gov. Retrieved November 7, 2022, from https://calcivilrights.ca.gov/

[3] Adams, E., Palma, A., & Gov/Humanrights, N. (2022). Commission on Human Rights. Nyc.gov. https://www1.nyc.gov/assets/cchr/downloads/pdf/publications/Salary-Transparency-Factsheet.pdf

[4] Huet-Vaughn, E. (2013). Striving for status: A field experiment on relative earnings and labor supply. Job Market Paper, UC Berkeley.

[5] Huet-Vaughn, E. (2014, April 8). The unexpected benefit of telling people what their coworkers make. Atlantic Monthly (Boston, Mass.: 1993). https://www.theatlantic.com/business/archive/2014/04/the-unexpected-benefit-of-telling-people-what-their-coworkers-make/360301/