Spooky Season Kicks Off With More States Enacting Salary Disclosure Laws
Published: September 29th, 2021
Written by: Deborah Szajngarten
October 1st is a scary date for Connecticut employers because House Bill Number 6380 takes effect, requiring them to disclose salary ranges for all vacant jobs. Connecticut is not the first state to require employers to disclose salary ranges to employees upon request. California, Maryland, Washington, and Rhode Island all require salary range disclosure upon request. Colorado takes it a step further and requires the salary range posted in the job description, even if the position is remote.
Designed to protect candidates from wage discrimination, House Bill Number 6380 mandates that companies disclose the salary range for vacant positions when the candidate requests it. This can take place at any point during the interview process prior to offer or hire, and that range must be based on a pre-existing (ideally third party) comparable job scale.
Over the past ten years, we have watched states trend toward creating legislation that shifts hiring practices in favor of the employee. It began with States banning the practice of potential employer’s asking for a candidate’s current (or last) salary and using that as the basis to make an offer. The premise of this argument was that making an offer based on the candidate’s prior salary helped to perpetuate wage disparity leading to gender, age, and other discriminatory practices within the workplace. Companies could have 15 managers at widely varied pay scales, exposing them to risk of lawsuit. By changing the laws, employers were forced to price a job based on a salary range for the function and level of the role itself, leading to fairer and more equitable hiring.
This new trend in legislation takes it a step further. It requires the employer to disclose the salary rage of the role up front. There are a lot of benefits and some obvious drawbacks to this practice. If the recruiter shares the salary range with the candidate at the beginning of the process, it allows both parties to quickly assess if they are financially compatible. The obvious drawback is that a candidate will almost always seek the highest end of the range.
It’s easy to say, “my company is not based in Connecticut (or any of the other states that have enacted similar laws), so I don’t have to worry about it.” That would be a mistake. According to an Upwork study, more than 40.7 million Americans will work remotely by 2026. As an employer you must consider the legal ramifications of hiring within the state your organization is headquartered, but also the legal requirements of the state the employee resides. Hiring remote employees is legally equivalent to adding a new work location, which means the employees’ taxes, benefits and legal protections for that state will apply.
How do recruiters stay both competitive and legally compliant? Thankfully today, there are many third-party references that can provide you with compensation ranges for most job functions, titles, and locations within the United States. Keep in mind that not all compensation tools are created equally. When looking for a third-party compensation analysis resource, make sure it is in line with the U.S. Department of Labor’s salary reporting; it can provide you with data for the types of roles your organization frequently searches; it can predict trends at least five years out; and it’s fast and easy-to-use.
Don't let wage range disclosure be the skeleton in your closet, prepare for changes to salary disclosure law.
Here are six tips that all recruiters should consider in preparation for compliance with these new legal regulations:
- Knowing the laws for each state.
- Ask candidates their desired salary in the first screening call. This allows you to set financial expectations with the candidate up front and not waste each other’s time on a role that doesn’t financially align.
- Really understand the salary range for the role that you have so that you can adjust your offer based on the right candidate. If they are outside of that range and you feel strongly about hiring the candidate, consider moving the job up into a different title or salary band.
- Understand the salary ranges for the role within your area, the candidate’s area, and the national average—be aware that the national average might be lower than the location of the job or the candidate’s area of residence.
- The law requires you to disclose a range – be consistent. If the candidate challenges the range, have a solid standing for why you are pricing the role as you did.
- Leverage third party sources, like JobTarget’s Compensation Analyzer, to provide you with a credible reference for the salary range of the role.
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