Most New York City businesses today will be required by law to include salary ranges in job advertisements, escalating a frenzy among employees and job seekers seeking pay increases in line with new postings.
According to a survey of 884 companies in North America conducted in May and June by consultancy Willis Towers Watson, nearly a third are considering or planning to increase the frequency of pay raises.
Other companies are training managers and arming them with talking points on how to respond to employees who inquire why a posted salary is higher than what they currently make — and how to address discrepancies revealed by office gossip and salary spreadsheets circulating within companies.
“With inflation and the rising cost of everything,” said Odes Roberts, owner of Almost Studios, a small design studio in Brooklyn, New York, “I fear some staff may ask for more money than we can afford.” “However, I also want everyone in our company to know who is paid what.”
Pay has long been a taboo topic in the workplace, but this is changing rapidly. Younger employees are less hesitant to discuss their pay with coworkers, and sites like Glassdoor and Indeed are providing more pay data on specific companies and industries.
New legislation is on the way that promises to significantly increase the amount of public pay data. The pay transparency law in New York City, which requires companies with four or more employees to post salary bands for open positions beginning Nov. 1, is similar to a law in Colorado that went into effect last year.
In New York, fines for noncompliance could reach $250,000, though officials say they will not levy fines for first violations if companies post the information within 30 days of the warning.
Washington and New York are two states that have passed similar legislation. California intends to go even further, requiring companies to provide salary ranges for both new listings and current jobs upon employee request.
Business Concerns
Despite the fact that companies with New York City operations have had months to prepare for the new law, which was supposed to go into effect in May, many executives still do not feel prepared for the change.
“There’s a fear of transparency,” said Roxanne Petraeus, CEO of Ethena, a workplace compliance training company based in Brooklyn that assists businesses with hiring and interviewing. “It can always feel frightening.”
In April, Ethena, which has 73 employees, published salary ranges for US job postings. The practice caused some discomfort at first, and a separate firm-wide salary review process resulted in pay raises for a few current employees, but opening up was more effective than employees relying on industry gossip or rumors, according to Petraeus.
Although bonus and equity compensation are not currently required by New York City’s pay law, the company is considering including them in its existing salary disclosures to provide a more complete picture of pay.
‘No Alternative’
When pay disclosure rules became the norm in Colorado, some businesses initially avoided the issue by withdrawing job ads from the state. With the rise of remote work and pay transparency in major states such as New York and California, it will be more difficult to avoid the trend.
According to some estimates, as much as one-third of the US workforce will be able to see or request salary ranges in job listings by next year. A number of large corporations, including Microsoft Corp., have already announced plans to implement the practice on a national scale. And, beginning this week, the job site Indeed will require employers to include salary information in New York City job postings unless they are exempt from the law.
Large companies’ job postings on Indeed that already include salary figures show a wide range of pay. A marketing analyst at American Express Co., for example, had a salary range of $55,000 to $105,000 per year. Meanwhile, the hourly rate for a senior executive assistant at AmEx ranged from $28.45 to $57.70. A job posting for a technology sales representative at International Business Machines Corp. listed a salary range of $72,000 to $146,000, while a listing for a financial professional at New York Life Insurance listed a salary range of $59,063 to $114,273. IBM and New York Life did not respond immediately to requests for comment.
“Although the law is only applicable within New York City, we have extended this same level of transparency across the US to ensure a consistent experience for job seekers interested in finding their place on our team,” AmEx spokesperson Rohan Ramsay said.
Businesses that do not have a plan in place to deal with the disclosures risk losing employees, especially if the labor market remains strong.
“Companies have no choice but to do this,” said Allyn Bailey, director of hiring success at SmartRecruiters, a company that creates software to help companies with their recruiting processes.
Bailey stated that existing employees at one of her clients, a 500-person Colorado software firm, demanded the higher pay they saw advertised for new hires but were disappointed when the firm was unable to immediately raise salaries. The company had planned to do it over three years but couldn’t afford to do it right away, prompting several employees to resign. To fill the newly vacant seats, the company had to raid competitors.
Not Quite Transparent
Some businesses want to stay ahead of the disruption. According to Willis Towers Watson, 17% of companies already voluntarily list pay ranges, and another 62% are considering or planning to do so.
HubSpot, a software company, decided in July to disclose salary ranges, applicable commissions, and bonuses for all jobs nationwide. To prepare for the change, the company met with employees a few months before to discuss where their own compensation fell within those ranges and why their pay was structured that way.
Some new hires may be paid outside of those ranges, and “that’s OK,” said HubSpot assistant general counsel Kelley Burwood during a webinar for businesses to discuss New York’s new disclosure rules, because the law only requires the firm to make a good faith estimate. “We’ll see how this goes first and work out the kinks,” she explained.
Stacy Sahagian, senior director of people at Dashlane, a New York-based software company with 368 employees, nearly half of whom are based in the city, said during the webinar that she will release salary ranges for job postings in the city this week.
Dashlane creates its ranges by taking the midpoint of its existing salaries for a given role in a given country, then going about 10% lower and 5% higher to provide some flexibility. But the key is to go beyond the numbers and explain what they actually mean to both job seekers and current employees.
“Transparency without context achieves little,” she says.