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Welcome to This Week in Benefits, a new biweekly podcast from Mployer Advisor, the company that is changing the way employers search, evaluate, and select insurance advisors online.      

In each episode, our team will bring you the latest news and industry updates in the world of employee benefits. We will break down top headlines, bring you interviews with industry insiders, and highlight market trends and stories we’re following.    

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Show Notes      

Date: November 16, 2022  

Episode Season and Number: Season 1, Episode 16      

Episode Title: What Employers Need to Know About Salary Transparency  

In this week's episode, Abbey Dean and Weller Emmons (Mployer Advisor's VP of Operations) discuss new mandates and regulations around salary transparency.

To listen to Episode 16 of This Week in Benefits, click here.      

Additional Recommended Reading      

Pay Transparency Laws Are Here. What’s Up With the Broad Salary Ranges? (Human Resource Executive)  

Employees Are Demanding Pay Transparency. Here’s How HR Should Respond (Human Resource Executive)  

Many Employers Will Soon Have to Advertise Salary Thanks to Two New Laws (CNN Business)

Pay Transparency Laws by State (Zippia)

Pay Transparency Regulations Frequently Asked Questions (U.S. Department of Labor)  

Episode Transcript

Abbey Dean: Hi everyone and welcome to another episode of This Week in Benefits, a podcast from the team at Mployer Advisor where we discuss all things employee benefits. Today we have the Weller Emmons back on the podcast to discuss salary transparency, specifically new laws that have mandated salary transparency that have recently taken effect or soon will starting January 1st in states like California, Colorado, and even New York City. So what we're going to do is take a step back from some of those headlines and discuss what problems these new laws are looking to solve, what the pros and cons are for employers and employees, and we are going to make some predictions about what is to come, as well. And now without any further ado, here is my conversation with Weller.

Hi everyone and welcome to another episode. I'm thrilled that Weller Emmons is joining us for this episode. How are you doing? Weller

Weller Emmons: Good, Abbey. Thanks for having me.

Abbey Dean: Always. Okay, so as you guys heard in the introduction today we are talking about salary transparency and as our in-house HR expert, I thought bringing in Weller would be a very smart thing to do. So, Weller to start out with, can you explain the logic behind salary transparency laws specifically what problem it's trying to solve?

Weller Emmons: Yeah, so I think the real problem that these laws are trying to solve is around pay and inequity. So there's much documented studies about how men in general make more than women and that there's differences between race and other kind of sociodemographic factors. And what I believe a lot of states are trying to do is actually prove this empirically and to prevent it from occurring so that as new as potential candidates go into a job, they can see the salary range, they can see if it's on par with maybe current salaries posted by that company. And that way there's less ability for the company to have disparate salary ranges for a given position.

Abbey Dean: And we should say that one of the timely reasons we wanted to do this podcast episode is because as of November 1st, New York City just passed their laws around salary transparency, which you guys have probably seen. And there are a handful of other states that have passed similar laws as well, right, Weller?

Weller Emmons: Correct. California has something on the books, Colorado has had something on the books, other random municipalities have various pay transparency. Some of it is around looking at how you use previous salary and things of that nature. So it's a little bit of a different flavor of pay transparency, but I would say the New York is probably the one making the most waves right now.

Abbey Dean: So, Weller there's been a lot of debate around the sort of pros and cons of salary transparency, and I wanna take a second to look at this from the employees point of view and the employers. Let's start with the employee. What are the pros and cons behind this?

Weller Emmons: Yeah, and in general I will say that I think this is more beneficial to employees or potential employees than it is to employers. But there are pros and cons on both sides. To start with the employee or the potential employee, this really provides them more information as they go into salary negotiations. Like any negotiation information is a key aspect and a person with the more information usually has an advantage in a negotiation. And historically employers have known all the salaries of their employees and the employee or potential employee has known absolutely no one else's salary except for their own. So there's a large information asymmetry at play under this rule. This will kind of provide additional information to the employee so the ground is more even and they can better negotiate with the employer.

Secondly, I think for a lot of people this will help them filter out jobs that aren't a match for them on a compensation basis. I know previously when I have looked for jobs some website job websites will actually have estimated salary ranges and I've set filters where anything below X number I I'm not even get to consider because it, it's not worth my time. And I think that'll help some employees continue to filter out jobs that aren't a match and no one wants to spend hours and weeks prepping for an interview and then you get the offer and it's a low ball offer and it's not even close to what you thought you wanted to be paid. It's a waste of everyone's time. I think one of the last major pros for employees is that it can help reduce pay inequity. So again, you kind of understand what your peers are making, what similar jobs are making and you can negotiate up to a level that is commensurate with your experience, not necessarily by any other demographic factor that could produce inequity such as race, gender, etcetera.

Abbey Dean: I will also say that if I am an employee or if I'm a potential employee and I'm looking around and I see a job that is very, that I'm interested in, but they have very clear ranges that aren't kind of like a hundred grand apart, if they list their benefits out, I'm automatically a little more interested in that company cause I feel like they're being transparent at the start too. And I think it's something that Weller has said a lot before, it's a signal even before you're an employee about the company culture too. Do you think that's fair?

Weller Emmons: Yeah, absolutely. I think there's all kinds of signals in companies that attract certain types of talent, certain types of people who align with that company's mission and values and transparency can be another one of them.

Abbey Dean: Right. So if I am an employee, then what are the cons of salary transparency?<laugh>

Weller Emmons: All right. So I think the number one thing that comes to mind would be maybe jealousy or angst. If you find that your company is hiring for a similar role and it's the pay scale is much higher than what you're currently making or you find out that a new employee is making more than you, I think that can bring in some workplace toxicity. There may be good, really good business reasons that have nothing to do with discrimination about why that employee makes more. Without you having all that information, you may be jealous and be present some kind of resentment toward the employer or even your coworkers.

Abbey Dean: Right. And I will say it, this has happened to me before at not a hundred grand different scale or anything. I would mean would almost love that to happen. In some ways I don't have those kind of problems yet, but I found out when talking about a coworker at a former job that even though we were performing the same roles, I was making about $10K more than her which led her to go ask for a raise, which was good. But also those kinds of conversations can make employers nervous too. I would imagine if I was the employer. Cause then you kind of have to act quickly and then you're like, well why did this happen in the first place?

Weller Emmons: And I think that's a good segway into what are the pros and cons for the employer and on the cons if you just spoke to it, if your employees are realizing that their peers are making more than them, I would venture that you're going to start getting a lot of requests for raises to equalize pay and that that's obviously going to cost you more and salary and benefits and everything else. And if you can't match that for whatever reason, you may see turnover in your employees as they go search for someone who is willing to pay them what they think they're worth.

Abbey Dean: It's also, it just feels icky, right? You lose trust a little bit in your employer if you feel like you're maybe being cheated or you're not as valued as much. Even if salary isn't the number one thing that's most important to you, it kind of leaves a bad taste in your mouth.

Weller Emmons: Yeah, absolutely. I think the toxicity part we talked about on the employer side also impacts, sorry, the employee side impacts the employer as a whole. They want a harmonious group of employees and anything that's going to introduce some kind of negativity or resentment between them is going to cause problems. I think the other major con would be around the regulatory burden this represents, so now if you have employees in Colorado and you're hiring for another job and that job could potentially be done in Colorado, and let's be honest, a lot of jobs now can be done wherever given the remote work situation. You now have to post a salary range of that job in the Colorado market. So let's say you're hiring for software engineer and you're based in Nashville, Tennessee as such as us, that job could be done in Colorado. And so if you post it in the Colorado market, you're going to post a salary in the Colorado market.

And a smart employee or a potential employee may look at the job posting in Colorado, even if they're based in Tennessee, and understand what the salary range is there. And different states have different regulations. And so I think any kind of regulation on the HR front, I won't say it can be burdensome and I think it's more burdensome the smaller the team you have I forget whether it was California or New York, but one of them requires this pay transparency once you have more than four employees. And for really small businesses such as four or five people, you probably don't really have a true dedicated HR leader. You just have another person on your team handling it. And it's an additional step they have to do and to ensure that they're being compliant with not only their state's regulations but regulations across the entire nation. And that could be 51 different rules, which is just, can be a headache is what I'll say there.

Abbey Dean: I think something Weller and I were talking about before we started recording too is how this really plays into the idea for employers and employees around total compensation and thinking about how sure, a salary will always be number one, but if your salary represents 70% of your overall compensation benefits can play such a huge role here too. So, being transparent in that way, maybe this could lead to other conversations around benefits and that being a competitive edge as well.

Weller Emmons: Yeah, I, I've actually had a former employer who listed out my salary, my potential bonus then their 401k match and then their health insurance contribution and added all that up so I could see what my total compensation package was. And salary only paid a part of it. If this law only requires you to post salary. Then those companies that have a proportionally higher benefits package, maybe at a slight disadvantage because they're, they're not competing on salary necessarily, they're competing on the total package including benefits. So for those companies that tend to have a higher benefits package, they're going to have to somehow modify their job postings to call that out so that potential candidates see that the benefits not necessarily in the salary but in the total benefits package as a whole. And that's what the compensation should be judged upon.

Abbey Dean: Right, like paid parental leave, ability to work from home, 401k, 401k matching. I mean all of that could add tremendous value alone.

Weller Emmons: Yeah, absolutely. And we've even seen some crazy benefits, we've talked about this on previous podcasts, especially in the tech world where they even have people go pick up your dry cleaning. So there's all kinds of small benefits that could be of value to potential candidates.

Abbey Dean: And could really add up.

Weller Emmons: Yeah, absolutely. And we also mentioned earlier that on the employee side, this will help them negotiate. So obviously if employees are having better time negotiating, employers will have a worse time negotiating because they've lost their information advantage. So I think that's kind of the last major con. On the pro side for employers, I think it really benefits companies that don't have any pay inequity problems.

One company that comes to note is American Express. They're one of the few companies that actually has women earning on average more than their male counterparts. And American Express has been very forthcoming about this and paraded it for years now, not just recently. And so if you're a company where you can definitively say something like that, you can keep on promoting it and this is ability for you to go attract talent based on that. Again, I think also saves some time for HR professionals and the fact that they don't have to go through the entire interview process only to offer a salary range that's not in line with what the candidate was seeking. So that could save some time as well.

Abbey Dean: I've been on job interviews before too, where even in the first interview, even if it's a question you fill out on your easy apply LinkedIn button or whatever, one of the first things they ask before you move on to the next round is what your true range is or if what you put actually matches. And I really like that because it just saves everyone time. I like the forthcomingness of it.

Weller Emmons: So this would even prevent you from necessarily applying from a job that you, you'd see right away whether a job is a salary range or not.

Abbey Dean: Right. So it's almost, I think you could use that to your advantage. And I think if you're an HR manager trying to field 200 applications <laugh> that come in, it's a way to help and could make you think about, it could be a good exercise in thinking about how you wanna broach questions like this in general. With talent you're looking to retain or if you're working with an outside recruitment agency, like questions like this could be good to think about in advance of that. Correct.

Weller Emmons: And one other thing that, I don't know if it's whether it's necessarily a pro or a con, but it'll certainly be maybe a challenge for employers is different markets pay different rates for the same job. Everyone knows that places like New York, DC, San Francisco are very expensive to live in. And so the compensation for the same job in those cities is much higher than the same job in say, Mississippi. And so I think employers are going to have to have conversations and understand what the cost of living adjustment may or may not be for some of those positions and communicate that out to potential candidates and explain why even for the current roster, why someone in San Francisco is making more than someone in say, my hometown of Hattiesburg, Mississippi.

Abbey Dean: <laugh>.

Abbey Dean: So Weller, what predictions do you have around how laws or mandates around salary transparency will continue or maybe not continue in the months and years to come?

Weller Emmons: So we said earlier that the primary drive around this was around equity. So I think in states and municipalities where equity is a large concern, you'll continue to see these laws kind of come up in various flavors and variations. And I think this tends to be more of a blue or democratic thing. So I think you'll probably see it occur in those cities and states more so than maybe on the red, Republican side. And that's in terms of mandates. Now, I think will be interesting. If I am an HR person, which I am.

Abbey Dean: Which he is.

Weller Emmons: Sometimes everyone can be a little bit lazy and it may just be easier that if it's mandated in one of your states but not the other, just to make our lives easier, we're just going to have the same job posting everywhere. So that way I'm not saying am, in in compliance in Alabama, but not in Colorado, but I am in New York, I'll probably just do a robust job posting and use the same job posting everywhere rather than having state specific job postings. So even if it's not mandated, I think you'll see the number of jobs with salary information only increase just cause HR people can be lazy.

Abbey Dean: For simplicity.

Weller Emmons: For simplicity's sake.

Abbey Dean: Yeah, no, that makes sense. I do, I was just telling Weller in between recordings, I do think it's still going to be weird if employers, so in New York City, if I'm an employer and now I'm listing these huge salary ranges what kind of conversations that introduces internally with my team I already have about salary and compensation, especially if it's something that they've maybe not felt like they could talk about before or ask about what does that mean for company culture? What kind of conversations and anxieties could that possibly produce? That's tricky.

Weller Emmons: Yeah it's going to be a challenge for HR leaders and for managers as a whole as this becomes more prevalent. People are going to ask more questions, they wanna know why they're not being paid as much. And there may be, again, perfectly valid and very defensible business reasons as to why, but you're going to have to have those conversations. And so it could end up taking a lot of time to process and go through those conversations and there may be some fallout from those conversations.

Abbey Dean: Right, but overall seems like a good positive move. It seems like this is something employees or people looking for jobs want to see. And I think that's the sort of other thing as well. If employees, if people hiring and people looking for jobs want to see things like this and those employers need those kind of applicants, they'll probably include it.

Weller Emmons: Again, it can be a little bit of signaling; it can represent a company's culture. It's going to introduce those hard conversations, at least initially. But I think over time those conversations will kind of peter out, cause it's all transparent, everyone kind of knows what's happening. So I think the transition period could be challenging, but over time it'll probably just fade away.

Abbey Dean: Maybe we'll all just become even stronger and more emotionally intelligent <laugh> people at work. Do you think?

Weller Emmons: I would hope so.

Abbey Dean: I guess we'll just find out. Thank you very much Weller Emmons for all of your insight and expertise. I appreciate you.

Weller Emmons: No problem. Abbey.

Abbey Dean: Thank you for listening to this week's episode of This Week in Benefits brought to you by Mployer Advisor. Mployer Advisor is changing the way employers search, evaluate, and select insurance brokers. Our intuitive platform connects employers and employees to get great benefits and insurance plans by providing employers with actionable data to easily evaluate and select the best advisor for your company's specific needs. To learn more about Mployer Advisor and our suite of products, please visit our website@mployeradvisor.com and tune in next time. Thanks.