Pay transparency is the concept of allowing employees to discuss their pay and benefits without fear of reprisal. In the past, many organizations prohibited employees from discussing their compensation – even to the point of threatening termination if such conversations took place. Lack of pay transparency can lead to inequities in pay and discrimination in the workplace (especially for women and minorities). Fortunately, thanks to recent legislation such as the Lilly Ledbetter Fair Pay Restoration Act of 2009 and Executive Order (EO) 13665 in 2014, we are seeing a shift in this way of thinking. (By the way, it has long been a violation of the National Labor Relations Act to prohibit pay discussions!) How can your organization ensure its pay transparency policies promote today’s way of thinking? Here are few ideas to consider:
Review Your Existing Policy
Is your pay transparency policy out of touch with today’s culture and compliance requirements? If so, it may be time to draft a new one that reflects the changing times. Yet, allowing employees to discuss their personal compensation and benefits does not have to be a free for all. As the employer you can set reasonable boundaries for where and when these types of conversations are permitted in the office. For example, in New York, employers are allowed to establish reasonable workplace limitations on the time, place, and manner for inquiries/disclosure of wages.
Evaluate Your Salary Negotiation Process
If two new hires are discussing compensation over lunch and they find out you offered one of them a significantly higher salary even though they have comparable experience, most likely you are going to have a problem on your hands. The best way to prevent this is to have a consistent, fact-based process for salary negotiations. Many employers tend to use a person’s previous salary history as a framework for what to offer. This behavior can place many applicants at a disadvantage due to a previous biased manager or past gender stereotypes. Ultimately, a person’s salary should reflect the value of their position to the organization – not what they were making somewhere else. Know the monetary value of each position and use that as your framework for negotiations.
For more information on your state’s Equal Pay and Pay Transparency Laws, visit the Department of Labor’s website.
Eager to get your pay transparency philosophy up to speed with today’s workplace culture? Email us or give us a call at 703-587-5615. We work with our clients every day to ensure they have sound, compliant policies in place. We can do the same for you.!