December 20, 2022 4:11 PM EST

On January 1, pay transparency will become law in California, the nation’s most populous state, and Washington. The two states will join Colorado; New York City; and several other localities in the New York area, and a fifth of all workers nationwide will be covered under pay-transparency laws. (Several other states and localities have less comprehensive salary-transparency requirements.)

The new legislation is a victory for pay-transparency advocates such as the OECD and the National Women’s Law Center, who point to pay transparency as a way to close the wage gap for women and workers of color by making it easier to identify and address pay discrepancies.

But without a standard federal law, states and localities acting independently have created what Melissa Camire calls “a very patchwork system.” Camire, a partner at law firm Fisher Phillips who works on the firm’s pay-equity team, points out that employers operating in multiple states —including those employing remote workers who could reasonably do their job in multiple jurisdictions—will have to parse differing requirements between states and localities.

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California and Washington, for example, cover only employers with 15 or more employees, while New York City’s law includes smaller employers as well. Some of the statutes require only salary ranges, while others require postings to include total compensation information, including benefits. Some require preemptive disclosures only for external applicants, while others cover internal promotions and transfers as well.

Instead of creating different postings to satisfy individual laws, Ben Ebbink, a California-based partner with Fisher Phillips’s pay-equity team, recommends crafting job postings to comply with the most stringent ones. “The approach is to write to the most restrictive requirement and make that your standard,“ he explains. That way, all postings “will be compliant with other jurisdictions that don’t necessarily require that much.”

To help workplaces develop a comprehensive compensation strategy that goes beyond compliance, Charter published Get Your Organization Ready for Pay Transparency: A step-by-step guide in collaboration with OpenComp. The free playbook is designed to guide organizations through that process through four key questions:

What does compensation look like at your organization?

Make sure your compensation strategy is setting you up to pay your employees fairly and equitably with five data-driven steps:

  1. Conduct salary benchmarking with current, verified, and relevant compensation data.
  2. Develop a compensation philosophy by determining your market position, pay mix, segmentation by department or role, and geographic strategy.
  3. Create a job-leveling framework that defines the seniority, expectations, and responsibilities for a specific role, as well as the process for progression through the levels.
  4. Review or create salary bands, and define the cross-functional minimum, midpoint, and maximum for pay ranges for like-for-like jobs.
  5. Define your processes for promotions, merit increases, and bonuses by creating criteria for eligibility, award amounts, and award schedules.

How do you communicate your compensation philosophy to employees?

Now that you’ve defined your compensation philosophy, it’s time to share it. To shape your strategy, start with a few simple questions: Who, what, when, how, and why?

A successful strategy focuses on building trust in the policies by helping employees to understand, advises Ashley Brounstein, OpenComp’s senior director of people. “It all starts with education,” she says. “If you don’t understand how decisions are made, then you can’t trust the process and you can’t trust how your own compensation is delivered.”

How do you talk about compensation throughout the recruiting process?

To comply with the strictest pay transparency laws, job postings should include a specific salary range, with minimum and maximum, that reflects actual compensation to your best knowledge. To comply with laws in Colorado and Washington (but not in NYC), it should also include a description of other perks and benefits, including stipends, bonuses, retirement programs, and insurance offerings.

But beyond compliance, the job posting is often also a candidate’s first impression of a company’s culture. As such, it’s a powerful way to communicate your compensation philosophy and how you value equity and transparency. To put your best foot forward with potential applicants, include additional information like a full description of the role, information about your organization’s compensation philosophy, and a company intro that emphasizes your work, culture, and values.

How do you sustain an equitable approach to compensation?

Pay transparency doesn’t always lead to true pay equity. Systemic change only happens when company leaders can champion change from the top down, so create a plan to maintain your compensation philosophy even as your organization changes, grows, and responds to external forces like inflation or a recession. Practices like regular pay audits and equity analyses are key to identifying discrepancies along lines of privilege, and proactively budgeting to correct for pay discrepancies ensures that leaders can move quickly to make salary adjustments that correct pay inequities.

By working through each of these questions, organizations can develop a comprehensive strategy that goes beyond compliance, preparing leaders to discuss compensation openly while empowering workers to understand and advocate for their own pay—in short, to craft a strategy that’s equitable, transparent, and fair.

For more tactical advice, best practices, and tools including templates, scripts, and reflection activities for each week, download the full playbook on Charter’s website.

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