What you need to know about pay transparency (even if your state doesn’t require it)

Sixteen states and Washington, D.C. now have pay transparency legislation on the books, and Employee Benefit News reported in April that the European Union began requiring companies with 100 or more employees to report on gender pay gaps and act on them starting in June.

Missouri and Kansas are not on that list. Nearly every organization I work with here assumes that settles the question. It does not. If you hire a remote worker in Colorado, post a role a California resident can apply to, or run operations across state lines, you are already inside somebody else’s rules. Kansas City employers have a local salary history ordinance to account for on top of that.

Aon surveyed more than 1,400 HR and benefit leaders on their readiness. Nineteen percent said they were ready. Twenty-nine percent said their readiness had not improved at all in the previous 12 months. Sixty percent are taking a geographically targeted approach, complying only where the law requires it.

That last number is the one I would sit with. It is a defensible legal strategy and a poor employee experience strategy, and here is how it fails.

You post a range in Colorado because you have to. Your employee in Overland Park sees a posting for the job she already does. Now she wants a conversation, and her manager has no idea what to say.

Posting a number is a compliance task. Explaining a number is a management capability, and almost no one is building it.

Train your leaders to answer these without flinching. What the range is and how it was built. Where this person sits in it and what put them there. What specifically would move them higher.

Most managers I meet cannot answer any of the three. That is not their failing. Nobody ever told them the range, let alone the logic behind it.

Job seekers have gotten much better at finding ranges and no better at using them. A posted band of $70,000 to $95,000 gets read as an invitation to ask for $95,000, with no case made for why. Transparency cuts both ways, and the conversation only improves if both people come prepared for it.

Levine’s argument is that transparency builds trust, strengthens engagement, and improves retention. I would put it more bluntly. If your pay structure holds up under examination, saying so out loud is the cheapest recruiting advantage available to you. If it does not hold up, these laws will surface that eventually, and you would rather find it yourself.

Start with the audit. Then train the managers. The posting itself takes an afternoon.