how do new us salary disclosure laws affect the job search process?

posted about 3 years ago


Author: Adrian Kinnersley | Global Managing Director 

Across the United States, the way that we approach and handle traditionally sensitive data is changing, but how it’s changing isn’t exactly clear. On the one hand, we have an increasing number of companies opting to go down the ‘transparency’ route, with organizations such as Whole Foods making salaries public knowledge.

In fact, it has been suggested that financial transparency is associated with better performance. On the other hand, we have the Pay Equity for All Act(2016), which has encouraged a number of states and cities to introduce their own salary disclosure laws, making it a form of official discrimination to inquire about a candidate's pay. Jurisdictions with these laws already in place include Massachusetts, California, Delaware, Oregon, San Francisco and New York City; Illinois and New Jersey's attempts to pass similar legislation have been subject to state governor vetoes.

So why are these legislative changes happening?

Research suggests that some demographics are paid more than others for the exact same position. For example, the average male Certified Public Accountant in the US earns $85,215 per year, while the average female CPA earns less; $80,271. The overall aim of these new salary disclosure laws is to place the focus more on skills, experience, and ability to succeed at the job, rather than on gender, race, age, ethnicity, or previous salary.

An important question that's now being asked is how these new laws could affect the job search process. A major concern for job seekers, for example, is that they could find themselves wasting time applying for roles where their expected salary does not align with the compensation that the company is willing to offer. There are also concerns that these laws could place candidates in vulnerable positions, unable to provide evidence for securing a higher pay scale. The result could be skilled workers placed within lower paying jobs, significantly affecting quality of life for families located within these non-disclosure states.

Many job seekers will be relying more heavily on recruitment agencies for support and guidance in finding the most suitable paying positions, in a heavily veiled and censored environment. While recruiters may not be able to solve the job search problem completely, and could be forced to change their internal processes to ensure compliance with new regulations, there are ways that they can help job seekers to navigate the challenges.

Recruiters will be able to openly discuss salary expectations with candidates, should the candidate explicitly offer to share this information. Additionally, recruiters can work with candidates to help them realize their own value in non-financial ways.

Despite the hurdles that are being created within the job search process, it is important to remember that the ultimate aim of these salary disclosure laws is to protect candidates from unfair behavior and discrimination based on salary history. Laws such as this could work towards eradicating what is known as ‘carryover’ pay discrepancies, ensuring that employers are basing their compensation on the true value of a candidate, rather than on their value as determined by a previous employer. It is expected that more states and cities will follow, by implementing their own version of current salary disclosure laws.

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