Is Pay Transparency in Job Postings Bad for Business?

[Fit Small Business | ]( HR Insights from Our Experts Sponsored By: [ Is Pay Transparency in Job Postings Bad for Business?] Pay transparency laws require employers to include salary ranges in their job postings—a policy that more U.S. states are adapting. While this makes it easier for applicants to filter out job posts that offer less than their preferred salary, how are businesses benefiting from this law? For businesses located in states with pay transparency mandates, following this regulation ensures compliance with local laws. It also provides employers with the opportunity to: - Create and maintain a compensation plan: If your business has yet to set up a compensation plan with salary ranges, the pay transparency law forces you come up with one. While you can use [salary comparison tools]( to create this, we recommend partnering with an HR expert who can regularly conduct salary reviews (at least once a year) to find out whether the pay rates for the jobs in your company are below or at par with the market and your competitors. - Address potential pay equity issues: With pay transparency, you can spot [pay equity]( issues and come up with a plan to correct salary discrepancies and prevent wage discrimation. - Improve talent acquisition and employee trust: By being transparent about the salary range for an open role, you attract candidates whose expected salaries are within your pay range. You can even use the pay rates as a advantage over other businesses with the same job listing, especially if you’re offering a very competitive salary package. Plus, you can improve employee trust if your organization is transparent about how pay decisions are made. - Enhance recruiter productivity: With the pay range listed in your job posting, your recruiters can focus on the selection process and not worry about candidates declining job offers because the compensation package didn’t meet their expected salaries. Did You Know? There are various studies and surveys that show how pay transparency can affect talent acquisition and organizational culture. Here are some of the data points: - Many workers (85%) say they are [more likely to apply to a job]( that includes a salary range. Most candidates (68%) also [expect to see pay ranges in job postings](. - Over the past 12 months, 44% of [applicants did not apply to job postings]( that don’t have salary ranges. - Many employees (91%) who believe their company is transparent about pay decisions say they [trust that their organization is paying worker equally]( regardless of gender, ethnicity, and race.     Is Pay Transparency Bad for Business?   Technically, it isn’t. However, failing to include salary ranges in job postings may lead to compliance issues, especially if you’re located in a state that has a pay transparency law. New York is the latest to join the list of states (such as California, Colorado, Connecticut, Maryland, Nevada, New Jersey, Rhode Island and Washington) with this mandate. Illinois will soon require employers to add salary information to job posts—its new pay transparency rules will take effect January 1, 2025. While pay transparency offers benefits to businesses, you should also prepare to handle some drawbacks to having your company’s salary information listed in job postings. These disadvantages include: - Reduced candidate pool: If your salary package for a job post isn’t as competitive as other companies with similar open positions, then you may won’t get many applications. - Talent poaching: Your competitors can easily check the salary range you’re offering for a position to gauge whether or not you have competitive pay rates. They can use that data to create a more attractive salary package if they want to poach your employees. - Pay equity issues: If there are pay discrepancies in your company, affected workers may feel disengaged (which will impact productivity) if they discover that their salary is lower than the pay rates listed in your job postings. Plus, addressing pay inequality issues isn’t easy at it entails setting aside a budget to cover the pay adjustments and managing employee expectations. - Increased job offer negotiations: With the pay transparency law, you may find yourself negotiating with candidates who want the highest end of the position’s salary range. Handling this situation is also tricky because you don’t want potential pay equity problems, especially if the candidate and your current employees who hold the same position have similar work experiences and skills. However, it seems that some companies have found a workaround to the pay transparency law by advertising a larger salary range. Research from Indeed’s Hiring Lab shows that, in the past year, [pay ranges included in job postings have widened]( in tech hubs and metro areas that are required to disclose it. And of the 45% of U.S. job listings with some salary information, only 22% of the jobs posts show an exact salary and just 10% have an exact pay level. We don’t suggest you add a huge salary range to your open jobs as it could be detrimental for you, especially if your business is located in a state that requires it. It will also negatively impact employee trust and could result to one of the drawbacks we mentioned above. Staying on top of your headcount costs, hiring plan, and salary ranges can be challenging. If you don’t want to manually manage these processes, consider getting an HR software like Rippling. It has a headcount planning and compensation bands solution. You can set up custom approval workflows, create salary bands, and link it to Rippling’s recruiting module—making it easy for you to recruit qualified candidates within the company’s approved salary ranges. [Visit Rippling](         Want new employees to feel excited and ready to dive into their roles? Complete these 20+ essential onboarding tasks from our free onboarding checklist.     What’s new in HR? Check out some of our latest HR content:   [Managing Employees With ADHD]( In navigating the challenges of handling a diverse group of employees, it’s critical that you have a good understanding of individual differences. This includes workers with neurodivergent conditions like Attention Deficit Hyperactivity Disorder (ADHD), as they often possess unique strengths and have specific needs. If you have workers with ADHD, read our guide for strategies and tips on how to manage them. [READ MORE]( [Best Nanny Payroll Services]( Nanny payroll software is essential for families that prefer not to handle payroll themselves. The best nanny payroll services not only offers solid pay processing solutions, it helps household employers comply with federal, state, and local taxes. If you’re looking for a reliable payroll service provider, read our guide, which contains our six of our top recommended solutions for paying domestic workers. [READ MORE](     Meet Fit Small Business’ HR & Payroll Experts   [-Jennifer Hartman, HR Staff Writer & Human Resources Expert]( Throughout her career, Heather has worked to help hundreds of small business owners manage many aspects of their business, from bookkeeping to accounting to HR. Her experience has allowed her to learn firsthand the payroll needs of small business owners. [Heather Landau]( [-Jennifer Hartman, HR Staff Writer & Human Resources Expert]( Jen has more than 20 years of writing and content experience, working with small businesses and Fortune 100 companies. She worked as an HR generalist for over a decade, providing accounting, payroll, and HR expertise. [Jennifer Soper]( [-Jennifer Hartman, HR Staff Writer & Human Resources Expert]( Robie is a payroll and HR expert at Fit Small Business, focusing on software. She has over eight years of content writing experience, handling different topics. Robie also worked as an HR specialist for 10 years where she managed various facets of HR—from payroll and benefits to employee services and HR systems. [Robie Ann Ferrer]( [-Jennifer Hartman, HR Staff Writer & Human Resources Expert]( Juvy has more than 10 years of experience writing product reviews and providing online content for small businesses. Juvy was also a college instructor. She believes that her teaching background, writing experience, and supportive team members are crucial in providing the best answers to readers. [Juvy Vallescas]( [-Jennifer Hartman, HR Staff Writer & Human Resources Expert]( Genevieve has more than 13 years of writing experience, working with different clients in various industries. She has ghostwritten several books and ebooks on marketing and leadership. Genevieve also worked as an HR Head of a local manufacturing company and has helped small businesses set up their business and HR processes. [Genevieve Que](     Wondering whether your enforcement of a return-to-office policy is hurting employee attendance? Check out next week's newsletter for our take on this topic! Until next time, Heather Landau, Jennifer Soper, Robie Ann Ferrer, Juvy Vallescas, and Genevieve Que   For more quality resources on growing your small business: [Marketing]( | [Financing]( | [Accounting]( | [HR]( | [Retail]( | [Ecommerce]( | [Sales]( [Facebook]( [Twitter]( [LinkedIn]( [Alternate text] Want to change what you receive in your inbox? [Update Your Preferences]( [Image]   We spend hours researching and writing our articles and strive to provide accurate, up-to-date content. However, our research is meant to aid your own, and we are not acting as licensed professionals. 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