How Pay Transparency Laws Affect Your Employer Brand

One of HR’s most buzzworthy topics gaining attention across all levels of the business right now is pay transparency. While this topic may seem novel and new to some, it dates back over 15 years and is a bridge some companies started to cross a while ago. 

The topic of pay transparency has opinions on all sides; some are pro-pay transparency, others are against pay transparency, and a portion of people just aren’t sure what to think yet. Regardless of where you, or your company, may stand on the topic, a couple of things are certain:

  1. Pay transparency is the future. Based on the current momentum across multiple states, pay transparency is likely to become required by law in an increasing number of locations over time and companies across the nation are going to need to start thinking about it more seriously.
  2. It’s time for your employer brand to shine. Pay transparency directly affects the amount of information a candidate has about you and your talent competitors. This movement impacts the way companies recruit and retain talent, which means it's time to be extremely strategic with your approach to employer brand activation. Your employer brand allows you to attract candidates with your authentic employment relationship, which spans well beyond the dollar. 

Pay Transparency is the future.

Let’s first define and share some background on the topic. Pay transparency is the act of a company disclosing its compensation levels to create a more equitable workplace. Currently, the following states require or will soon require pay transparency from employers. Those states are: 

California, Colorado, Connecticut, Hawaii, Illinois, Maryland, Minnesota, Nevada, New York, Rhode Island, Vermont, Washington, and Washington, D.C.

And the list is growing. Maine, Massachusetts, Michigan, and Pennsylvania also have pay transparency proposals on the table, all of which could move forward by the end of the year.¹

It’s time for your employer brand to shine.

Since 2020, the number of online job postings that include pay transparency has more than doubled, increasing from 18% to over 43%.² As more and more job postings include compensation figures, it may feel increasingly difficult to compete for talent when candidates can directly compare salaries. 

Not so fast. There is some good news for you. 

Higher compensation falls third on the list of top reasons candidates accept new job offers following greater flexibility and better work/life balance.³ It’s clear that compensation is only one of many factors that play into the employment relationship candidates are seeking. By leveraging your employer brand strategy, you can authentically articulate your organization’s employment experience to effectively compete for talent with offerings that go beyond salary.

“I would strongly encourage companies to [get ahead of pay transparency] because there is ample evidence that strategic differentiation of HR practices (e.g., pay communication) against competitors offers many benefits (Boudreau & Ramstad, 2007). In my view, enacting Pay Transparency is an excellent way to ‘brand’ an organization as having a more equitable, transparent, and trusting culture.”
Tae Youn Park, Associate Professor of Human Resource Studies at Cornell University

As Professor Park alludes, once candidates and employees can see what is being offered from a compensation perspective across all jobs in the market, this becomes a prime time to stand apart from the competition with a strong employer brand. The relationship you build with candidates and employees matters, it’s noticed by all, and it helps you continue to compete for talent. A strong employer brand will set you up for success and allow you to:

  • Meet candidates where they are 
  • Provide candidates the information they’re looking for 
  • Authentically communicate your employment experience
  • Compete for talent beyond the dollar by building relationships with candidates (and employees) who find your authentic experience appealing 

Is your current employer brand strategy ensuring you’re communicating the full employment experience and telling a story that is well beyond the offered compensation package? It’s time to ensure your answer to this question is yes

¹ CNBC—June 2024 || ² HiringLab.Org—March 2023 || ³ SHRM.Org—September 2023

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