Pay transparency is increasingly making its way into state legislatures around the country. Washington state is the latest to pass new pay equity requirements for employers.
On March 30, Washington Governor Jay Inslee signed Senate Bill 5761 into law, which applies to all employers with 15 or more employees. As part of the new pay transparency law, organizations must publish the salary range, as well as “all of the benefits and other compensation to be offered” in every job listing.
Moreover, the law retains existing legislation that allows current employees to request the salary range for internal promotions and position changes within the company. Washington’s new pay transparency law goes into effect on January 1, 2023.
At this time, there are many unknown details about the law, such as whether it applies to out-of-state/remote employees, how compensation packages are negotiated, and how Washington state’s government will enforce it. State legislators should issue more information about the law in the near term.
Washington state joins New York City and Colorado in requiring salary range disclosures in job listings.
The push for transparency stems from its ability to reduce the secrecy associated with pay. This generates awareness within an organization and in turn, facilitates conversations for eliminating barriers that individuals sometimes experience in receiving equal pay for equal work. That’s because the act of documenting pay ranges and making them publicly available helps employers set clear parameters around certain job categories and reduces the possibility of compensating employees on a case-by-case basis.
Employers with operations in Washington state should begin analyzing their compensation systems now to prepare for the new salary range disclosure requirements.
Conducting a pay equity audit will help you identify current pay within job categories and begin establishing standards for equitable pay. In addition, conducting a pay equity audit provides insights into your current compensation practices. The audit will examine current employee pay and identify any unexplained pay disparities. With this information, you can correct any discrepancies between current salaries and compensation offered in job listings, before making the pay information publicly available. This will ensure there are no surprises for your employed staff.
Failing to conduct a pay equity audit now puts your organization at significant legal risk as current employees could become disgruntled with their compensation in comparison to the ranges included in the job listings.
Aside from complying with Washington’s pay transparency law, conducting a pay equity audit bodes well for organizations looking to foster a more equitable and inclusive workplace. Over 80% of workers say they are more productive when they’re paid fairly. And greater productivity means greater profitability for your organization.
If your business is considering a pay equity audit but is unsure of why you should conduct one, download our research report, Creating a Culture of Diversity, Equity, and Inclusion, conducted by the Harvard Business Review.
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