Put the Salary in the Job Description – Pay Transparency Laws’ Impact on Hiring and Pay Equity

Daniela Rakowski

Associate Editor

Loyola University Chicago School of Law, JD 2023

Lately, more and more job applicants seem to want to know the expected salary prior to applying to a job. In 2018, LinkedIn conducted a survey of 450 members asking which parts of a job description they found the most important. When surveyed, sixty-one percent reported that compensation was the most important, indicating that compensation is a key factor for many applicants in evaluating whether a potential job opening is worth their time. Although companies offer their reasons for keeping salary information from applicants, pay transparency, especially in the recruiting stages, is one of the main ways to achieve pay equity

So, should the salary be in the job description?

The corporate memes making their way around LinkedIn reflect this push for pay transparency. The posts ask viewers to react one way if they think the salary should be in the job posting, and another way if they think it should be kept private. The debate on the topic can get heated, often with candidates clearly wanting pay transparency but other individuals pushing for continued confidentiality.

Providing salary information is mandatory in some states

In Colorado, the debate is already settled. Since January 1, 2021, Colorado has required employers to include compensation in job postings in accordance with Part 2 of the Equal Pay for Equal Work Act.

While this seems like a win for employees, it could have the opposite effect. Although the law allows employers to post a salary range, rather than the exact compensation, this still seems to be too much disclosure for many companies. In light of the remote work surge in response to the COVID-19 pandemic, some employers are choosing to exclude Colorado applicants from their talent pool rather than disclosing the position’s compensation in the job postings.

Some companies, like Amazon, include the pay range for Colorado in their remote work postings, but over 150 companies are avoiding hiring candidates in Colorado because of the requirement. The main issue businesses seem to have with the new law is a concern that competitors may use the salary information provided in the job postings to lure employees away with more competitive offers, including higher salaries and better benefits.

Are these types of laws new?

Although Colorado is taking the most aggressive approach to pay transparency, it is not the first state to implement such measures. California passed a law in 2019 requiring employers to provide an applicant with a salary range for the position upon request after the initial interview. As of October 1, 2020, Maryland also requires an employer, upon the applicant’s request, to provide an applicant with the wage range for the position.

Some pay transparency laws extend to existing employees as well as applicants. Washington requires employers to provide a pay range to applicants upon request, as well as to current employees who are changing roles within the company if requested. Rhode Island has a similar law, requiring employers to provide a wage range for the position to applicants prior to discussing compensation, as well as requiring employers to provide existing employees with the wage range for a position if they are transferring internally, even if they do not request the salary disclosure.

Under Nevada law, employers must disclose the wage range to applicants after they have completed an interview, even without request, but current employees in Nevada must affirmatively request a salary disclosure from their employer. Connecticut also requires employers to provide salary ranges to applicants upon request and at least by the time the employer extends an offer, if not previously disclosed. Connecticut employers must also provide salary disclosures to employees who are changing roles as well as when requested by an employee.

Even beyond the State level, some cities are implementing pay transparency requirements. In Ohio, both Toledo and Cincinnati require employers to provide a pay range to applicants upon request once an offer has been extended.

 Including the salary increases pay equity

When the salary range is kept secret, applicants begin at a disadvantage. Not all applicants are skilled negotiators when it comes to their salary, and some will take the first offer they receive because they simply need a job. Beyond this, salary secrecy contributes to the gender pay gap.

Even if an applicant is a skilled negotiator, women often ask for less in negotiating their salary than men do, even when they are equally qualified for the position. When applicants are informed of the types of compensation or the typical pay for the position, women are more successful in the salary negotiations, narrowing the wage gap.

The public sector stands out as an example of how pay transparency increases pay equity. In 2012, the gender-based wage gap in the federal government, where salaries are publicly available, was thirteen percent – a stark contrast to the national average of twenty percent between all full-time workers.

Providing the salary in the job description increases pay equity by allowing applicants to enter negotiations with a more equal understanding of the position and its typical compensation. Transparency places applicants in a competitive standing to negotiate a compensation package that reflects their worth as employees.

Although providing salary information in job postings exposes companies to the risk that competitors can lure away talent with more attractive offers, ensuring employees are valued and compensated accordingly is worth it. Ultimately, if companies take the time to build cultures that support their employees, they should be successful in retaining their top talent, regardless of offers of slightly higher compensation.