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Job hunting can be exhausting and full of unknowns. Over the past year, Alaina, a 31-year-old biotech sales associate in Denver, Colo., started looking at job listings online, but she was able to scratch out at least one unknown: salary. In Jan. 2021, Colorado took the unusual move of instituting a law, the Equal Pay for Equal Work Act (sponsored by four female Democrats in the General Assembly), that requires online job listings to include compensation information, right there on the post. It is the only state in the U.S. that mandates this type of transparency, but on Nov. 1, 2022, New York City plans to follow in its footsteps with its own pay disclosure law, requiring companies with more than four employees to post salary ranges.
The New York law was initially set to take effect on May 15, 2022, but after pushback from businesses in late April, the city council delayed the start date to November 2022, and amended the law to only apply to hourly and salaried positions that are physically performed in New York City—showing how controversial this type of legislation can be.
But for job seekers like Alaina, who asked to go by her first name as she continues her job hunt, the transparency is a boon. It makes the search more efficient—and clarifies some big question marks well in advance of putting together a cover letter and going through an interview process.
A new report from workforce analytics companies XpertHR and Gapsquare showed that over 80% of U.S. employers who undertook pay equity audits found equity gaps in their organizations, reinforcing the need for legislation to help balance the scales. For businesses and HR departments, pay transparency is a needed reminder to keep equity at the fore—but, as companies in Colorado have discovered, it’s also a big operational headache.
Ben Wright founded Velocity Global eight years ago as “kind of an Airbnb” for helping businesses set up the structure for international workforces. “We’ve got the platform to ensure that you are hiring, paying, onboarding people, literally anywhere on the planet, 185 countries, all 50 United States,” he says over the phone from his home base in Denver, Colo. Velocity Global employs about 1,000 people globally itself—many based in Colorado, which Wright describes as “generally a business-friendly state.” Pay equity has been central to his business since the get-go, he says, so when the law came into being, he fully understood the intent. But the way it needs to be applied has been frustrating.
“Out of the gates, suddenly, every job posting had a salary, right? You cannot paint every single person in every single job with that same brush,” he says. “Maybe you’ve got somebody on board who is less experienced or had a change of career. So we’re not necessarily going to pay as much. But you’ll earn your way into a better salary if you succeed.” With the new law, that flexibility is limited. “It just created so much angst and anxiety across the board. We lost some good people because of it,” he says; some employees exited after adjustments were made. “Frankly, we actually limited our ability to go get people at higher compensation, who we would have wanted to be in those roles, because they look at it and you have to pick a standard pay for that role,” he says.
And, as remote work has become the norm for many companies, the Colorado law seems too far-reaching, Wright suggests. “What you pay somebody for a job in Denver is completely different from what you pay somebody in London is completely different from what you pay somebody in Kuala Lumpur,” he says. Plus, Wright says most countries don’t have similar regulations—even worker-friendly populist states like Brazil and France. (Canadian companies based in the province of Ontario are required to share salary ranges on listings, however, and the EU is considering similar legislation this year. Other countries have made a push for transparency in gender pay equity, and some like Norway have made existing salary information available upon request.)
Over at the Colorado Chamber of Commerce, President and CEO Loren Furman shares some of Wright’s concerns. “This statute has probably caused some of the most consternation to Colorado employers, more than many of the laws that we’ve seen over the last couple of years,” she says. The bill itself has good intentions, she says, calling it “fairly innocuous” in its early stages in 2019, especially in a pre-pandemic environment where remote work was less of a norm. “When the statute got interpreted through rulemaking, it got a lot more complicated and stringent on employers, and a lot more requirements than I think any of us anticipated,” she says. In the most recent legislative session, the Chamber was working with the governor’s office to change the statute to make it less onerous for employers to adapt to. In a tough hiring market, “it’s a workforce problem for the state of Colorado,” Furman says.
The ultimate impact, however? “It increased compensation, on average, across the board,” Wright says of his employees’ new conditions. “If they win, we all win. That’s all great. But you know, it’s also within the confines of whether the organization can continue as a profitable enterprise.” He says Velocity Global is “slightly less profitable” as a result. They had to invest more in HR hiring to manage the transition, too, and they lost some employees along the way. “Equal pay is important. I just think there’s more thoughtful ways to go about implementing such a thing,” he says.
While Wright says that the business leaders he’s spoken with have been “quite upset” about the legislation, a sentiment echoed by Furman, not all companies begrudge the change. StoneAge Tools is a rarity: the industrial cleaning provider is a fully employee-owned operation with an employee stock ownership plan, or ESOP. Based in the small town of Durango, Colo. (“Go to the middle of nowhere and hang a left,” jokes director of human resources Betsy Fitzpatrick), it’s the type of company that has always been unusually transparent in its finances, with about 160 employees. “I initially viewed the Equal Pay for Equal Work Act as a negative, but I now appreciate the accountability it creates,” says CEO Kerry Siggins. They made an effort to benchmark every position at the company to ensure they were complying with the new act, and found a discrepancy in wages for lower-paid workers. They increased wages and set a new minimum of $20 an hour. “I am proud of these changes,” Siggins says.
For HR director Fitzpatrick, the work of adjusting to the new law has been worth it. “I had already been anticipating it for a couple of years,” Fitzpatrick says. Her advice to HR managers preparing for changes: “Don’t be reactionary, be proactive.” She recognizes that the intention is to “correct a very long legacy of discrimination and unequal treatment in the workplace. And so for me, I don’t begrudge work that is of that nature. So embrace it.”
The legislation also narrowed the focus of their candidate pool when recruiting and hiring. Siggins says that candidates tend to “self-select” when they have the available compensation information. Pay conversations now happen within the first round of interviewing, rather than second or third. “They’re not going to waste their time with us, and we’re not wasting our time either,” she says.
That’s certainly been the case for Alaina, the biotech sales job seeker. In her case, salary expectations were already fairly standard in the industry. “I really, really, really like this law,” she says. “Companies are now having a really hard time keeping Millennials. We have been screaming from the top of our lungs for the last five, ten years that we don’t feel appreciated.” This helps level the playing field between employers and employees, she says. “It makes workers feel like they’re not getting the short end of the stick.” Pay conversations have become much more normalized amongst her peers over the past few years, and this just adds to that trend.
Plus, for Alaina at least, the bottom line is that her next job will be a step up. Her job hunt is winding down: she expects to sign a new contract shortly. “And I will be making a lot more,” she says, proudly. New York City may have delayed its law, but when it finally comes into effect next fall, many workers may find themselves in similar positions to Alaina: equipped with extra knowledge, and able to bargain for more.