Pay transparency is a hot HR topic across the world: In 2024, companies in the Singapore Exchange Regulation are set to disclose the salaries, benefits, possible bonuses and incentives of their C-suite execs and directors. As of last month, companies based in the European Union are now obligated to share information about pay differentials across gender. The directives also protect a job seeker’s right to know about a position’s pay and total rewards, average pay for said roles broken down by sex and gendered pay gaps within an organization.
In the U.S. — as New York City continues to be a battleground for reasonable salary ranges and California’s SB 1162 mandates eligible employers to break down pay by race, ethnicity and sex for each wage band — two states are up next in this year’s evolving landscape: Illinois and Colorado.
A closer look at the laws show a more nuanced version of pay transparency, wherein employers post salary ranges for job seekers, but also give current employees a fair shot at applying for those jobs as well.
Illinois: “No later than the same calendar day”
Sent to the governor’s desk in June, the Illinois legislature passed HB3129, which says that employers are now liable if recruiters fail to include pay range and benefits in job posting. It now awaits signature by the governor.
Likewise, the bill, which amends the state’s Equal Pay Act of 2003 law, mandates that employers let current employees know about promotion opportunities “no later than the same calendar day” that the external job posting is available.
The Senate amendment provides that yes, an employer can ask a job seeker about their wage expectations, but not before the recruiter discloses the salary range for the position.
Colorado: Remote work continues to be complicated
The Equal Pay for Equal Work Act, which Colorado passed in 2019, took effect in 2021. With the advent of remote work’s popularity, the law created a complex climate for Colorado-based workers. The law required employers to disclose compensation in job postings, let current employees know about promotional opportunities and keep records of wage rates and job descriptions.
Within the first year of the law going into effect, the state saw a 1.5% boost in workforce participation compared to neighboring state Utah, according to research firm Recruitonomics. An analysis of Indeed data showed that job postings in Colorado also dropped by about 8%.
Many labor activists and thought leaders also pointed out in 2021 that Colorado’s labor law had scared off employers — leading to the creation of Colorado Excluded, a database cataloging the major companies listing jobs that asked for workers anywhere in the U.S., except for Colorado.
Colorado Gov. Jared Polis (D-Co.) signed SB 23-105 into law June 5, 2023, which expands the responsibilities of Colorado employers. For both job opportunities and promotional opportunities — where a boss is considering more than one candidate — employers must disclose who is selected for that opportunity. For promotional opportunities, bosses must disclose career progression requirements and the role’s duties, salary, total rewards and access to future advancement.
Additionally, until July 1, 2029, employers without a physical presence in Colorado and fewer than 15 Colorado-based employees are only obligated to let Colorado workers know about remote job opportunities — not general, company-wide ones.
Furthering the scope of pay transparency, the amendment also mandates that the Colorado Labor Department create a concrete process for wage discrimination investigations. The changes take effect Jan. 1, 2024.
Pay transparency and the future of work
The argument against pay transparency is privacy for individuals but also against social discomfort. One case study is Kimberly Nguyen and her battle with Citigroup over an external listing for her current role; she makes $85,000, whereas the external listing offered $117,200 to $175,800. Ultimately, she was passed over for the role, but her tweets about the situation sparked a hot HR discussion about salary transparency.
Case studies like this one underscore that workplace harmony is at stake with increased, mandated transparency — but so is employer branding.
About a third of American job seekers said the companies that don’t list salaries in job descriptions believe that a company is hiding something, a report by job search Adzuna suggested. About 30% said the absence of pay in a job description indicates that employer would underpay them, and 28% said it makes the company look untrustworthy.