In Fight for Pay Equity, Pay Transparency is Indispensable

The Equal Pay Act of 1963, one of the most important pieces of legislation mandating pay equity in the United States, prohibits employers from paying workers less based on gender for doing equal work. Yet over 50 years since its passage, protections afforded by the law ring hollow for too many women who have no clue what their coworkers are making and are often discouraged or prohibited from finding out.

Today women of color continue to face sizable and stagnant pay disparities and should not be bearing the burden of identifying, challenging, and correcting gender-based pay discrimination, alone and in the dark. Without information about what employers are paying workers, employers are increasingly proclaiming themselves advocates for pay equity while perpetuating the wage gap behind the scenes.

If we want to achieve meaningfully pay equity, employers must make the move towards adopting transparent pay practices. One critical way we can do so is through legislation that requires employers to disclose salaries up front whenever they issue a new job opportunity. Colorado has already enacted a law mandating such disclosures and most recently, State Senator Jessica Ramos and Assembly Member Latoya Joyner introduced identical bills in the New York Senate and Assembly that would require all employers in the state to disclose compensation ranges up front when they issue a job opportunity and to existing employees upon request.

See our Q & A below for more information about salary disclosure laws and how they advance pay equity.

Why is pay secrecy a problem for pay equity?

Pay Secrecy has long thwarted pay equity for a number of reasons:

• It creates opportunities for employers to inject gender and racial bias into the salary setting process, which research shows employers do.
• It disproportionately disadvantages women and people of color, who historically have earned less due to discriminatory practices, have less leverage, and are thus in a weaker position to negotiate higher salaries.
• It limits the effectiveness of our existing equal pay laws, preventing women, people of color, and enforcement agencies, and other vulnerable groups from identifying problematic pay disparities asserting their rights under these laws.
• It allows employers to continue relying on applicants’ prior salary or salary expectations, a practice known to perpetuate the wage gap for women and people of color who have been paid less over time.

What are the benefits of salary disclosure laws?

Pay transparency laws that require employers to disclose salary or salary range for positions and to report or keep track of pay and demographics serve various critical functions. These laws would:

• Require employers to rely on standardized sets of qualifications, experience, competencies, and job expectations instead of individualized assessments, which often incorporate gender- and racial-based biases and tend to benefit white cisgender men.
• Create fairer employment practices and help reduce wage exploitation of low-wage workers, who are often paid unconscionable wages that persist because they can be set behind closed doors.
• Create more efficient hiring practices that help employers prevent problematic disparities, reduce liability, reduce the cost of overly individualized assessments, and eliminate inefficient hiring processes whereby workers apply for jobs they ultimately cannot accept because the salary does not meet their expectations.
• Reduce employers’ reliance on workers’ salary histories.
• Breathe life into existing equal pay laws, giving women and people of color more information to identify discriminatory pay practices and assert their rights.
• Give our most vulnerable workers more information and thus leverage in salary negotiations.

Who benefits from these laws?

Our most vulnerable workers, including women, people of color, and low-wage workers would have the most to gain from these laws, which would change hiring dynamics to limit bias, limit reliance on salary history, reduce opportunities for exploitation, provide more information to identify pay differentials, and provide more information to use in negotiations.

Employers will also benefit from these laws. Because the law applies equally to all employers, it allows all employers to now develop fairer and more straightforward standards for setting salary, helping to avoid problematic pay differentials and potential liability.

Won’t this approach be burdensome for employers?

No. Because employers ultimately have to set a salary for any new positions, salary disclosure laws would not require employers to do anything that they don’t already have to do. Salary disclosure requirements simply require employers set a salary or salary range at the beginning rather than at the end of the hiring process and to disclose using the same methods employers already use to share information regarding a new job opportunity. Instead of creating more burden, this approach allows employers to develop standardized guidelines and avoid situations where they go through several rounds of interviews only to find out that a candidate cannot take the position because the salary ultimately did not meet their expectations.

Shouldn’t employers have flexibility to set salary based on the qualifications of the applicants?

Even with salary disclosure laws in place, employers would retain flexibility to set salary based on an employee’s qualifications, they would just have to do so within a predetermined range. To the extent an employer wants to adjust a salary upwards or downwards after assessing the range of interested candidates, it can reissue the opportunity with a revised range. This approach is more fair and transparent and prevents employers from channeling opportunities in a way that has traditionally entrenched gender and racial bias.

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COVID-19 Resources. In this challenging time, our legal team developed a no-cost guide to Legal Rights and Economic Resources for Workers Impacted by COVID-19, also available in Spanish and Chinese.

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Legal Momentum Legal Team