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NFP Compensation Insights | February 2023


Pay Transparency Laws

Pay transparency laws continue to gain momentum as more states are now requiring employers to disclose salary ranges. These laws have been enacted as part of the efforts to achieve greater pay equity and identify pay disparities in defense of employees. While it may seem that this will only benefit employees, ultimately, compliance with these laws will lead to practices that will also benefit employers by creating a stronger workplace. Transparency and clear, open communication regarding compensation is becoming increasingly important in the employer value proposition. There’s no doubt this will benefit attraction and retention efforts and result in improved business performance.

In this edition of Compensation Insights, NFPCC dives into this trending topic with the latest in pay transparency laws and some of the challenges associated with the rules. We hope you find this information helpful as you prepare for compliance and open the door to better communication and openness around compensation. Don’t hesitate to reach out to NFPCC if your organization is in need of a pay equity analysis or assistance in navigating the new laws.

Pay Transparency Laws in the United States: Overview, Importance, and Challenges

By Matt Brown

Pay transparency refers to the communication of company pay practices to employees and explanation of how pay is determined for unique positions. While pay transparency can be a controversial issue, it has gained traction in recent years as a way to address pay disparities and promote fairness in the workplace. In this article, we will explore the current state of pay transparency laws in the United States, why pay transparency is important, and the challenges and criticisms faced by pay transparency laws.

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How Pay Transparency Leads to Pay Equity

Achieving true pay equity in the workplace is an evolving process. Over the years, federal and state laws have tried numerous approaches to addressing inequitable pay practices. In addition to federal equal pay regulations, almost every state has their own equal pay laws, requiring equal pay for equal work or equal pay for “similarly situated” employees. More recently, laws have been enacted to prohibit wage secrecy, and to break a chain of unequal pay by prohibiting employers from asking applicants about past salary history.

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Four Predictions For Pay Transparency Laws In 2023

Pay transparency in the United States is headed for a banner year in 2023.

A wave of pay transparency legislation has been passed and enacted across several of the most populous states in the country, including New York, California, and Washington, with more legislation in draft in Massachusetts, South Carolina, and other jurisdictions. Despite the onslaught of new laws, one source estimates that a paltry 39% of employers in California are prepared. 

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