A Pay Transparency Reckoning Is Coming for Big Tech

Applying for jobs can feel like a crapshoot. A position sounds good, the hiring team seems to like you but, even once you’ve jumped through all the cover letter and interview hoops, you can still easily end up blindsided by a pay offer much lower than expected. The tides of change are coming though. Companies nationwide will soon have to show you the money, before you even apply.

The standard, vague “competitive pay and benefits” line that employers love to trot out in their job postings will no longer be enough in many parts of the country. States and cities nationwide are passing or considering new pay transparency requirements, in a growing wave of legislation.

Colorado and New York City started the trend, instituting laws mandating that job postings include a salary range. Most recently Washington state, home to hubs and headquarters of tech companies like Amazon, T-Mobile, and Microsoft, became the third jurisdiction in the U.S. to pass such requirements.

Washington’s law will officially go into effect beginning on January 1, 2023. But it’s already having an impact. Earlier this week Microsoft announced a suite of “workforce initiatives,” including pay transparency in job postings. Cleverly, the company didn’t indicate that their new policy would soon be required by state law anyway—making it seem like a nice idea the tech giant had all on its own.

(Note: In the same company announcement, Microsoft also appeared to take credit for scrapping non-disclosure agreements and non-compete clauses–when other recently passed state laws also mandate those changes. The lesson: Tech companies will do a good thing, if the government make them.)

At least California and New York state also have similar, pending pay transparency bills up for consideration in their legislatures. If passed, the proposed California bill would be the strongest pay transparency law in the country, according to the Society for Human Resources Management. On top of requiring job listings to include pay ranges, the bill would mandate employers to report all current employee wage and demographic information.

Many other states have some sort of pay transparency, or “equal pay” law on the books. Importantly though, these don’t always apply to job postings or companies revealing salary ranges. Instead, some so-called pay transparency laws (like Louisiana’s), simply ban company retaliation against workers who reveal their pay rates to each other. Others, like Nevada’s 2021 law, only require potential employers to reveal pay ranges for a job once an applicant completes an interview. Others still allow companies to hold back pay info until an applicant asks.

Pay transparency rules help to alleviate wage disparities, employees and job applicants want them, and they’re generally considered good for workers. But large employers like tech companies likely aren’t thrilled about them (even if they pretend to be).

Corporate groups representing big hitters like IBM and JP Morgan previously publicly opposed the New York City measure.

In Colorado, where job postings have been required to include salary ranges for more than 18-months now, some companies tried to get around the rule by moving listings to remote only positions and excluding Coloradans from those roles.

And, in a report from Axios, a researcher from the consulting company Gartner said, “I had a manager tell me recently that pay transparency sounds great, but now I have this wonderful employee who is probably going to leave because they’ve realized that they consistently get strong performance reviews and make the bottom of that salary range.’” To which this Gizmodo writer says: Maybe pay your “wonderful” employees what they deserve????

Applying for jobs can feel like a crapshoot. A position sounds good, the hiring team seems to like you but, even once you’ve jumped through all the cover letter and interview hoops, you can still easily end up blindsided by a pay offer much lower than expected. The tides of change are coming though. Companies nationwide will soon have to show you the money, before you even apply.

The standard, vague “competitive pay and benefits” line that employers love to trot out in their job postings will no longer be enough in many parts of the country. States and cities nationwide are passing or considering new pay transparency requirements, in a growing wave of legislation.

Colorado and New York City started the trend, instituting laws mandating that job postings include a salary range. Most recently Washington state, home to hubs and headquarters of tech companies like Amazon, T-Mobile, and Microsoft, became the third jurisdiction in the U.S. to pass such requirements.

Washington’s law will officially go into effect beginning on January 1, 2023. But it’s already having an impact. Earlier this week Microsoft announced a suite of “workforce initiatives,” including pay transparency in job postings. Cleverly, the company didn’t indicate that their new policy would soon be required by state law anyway—making it seem like a nice idea the tech giant had all on its own.

(Note: In the same company announcement, Microsoft also appeared to take credit for scrapping non-disclosure agreements and non-compete clauses–when other recently passed state laws also mandate those changes. The lesson: Tech companies will do a good thing, if the government make them.)

At least California and New York state also have similar, pending pay transparency bills up for consideration in their legislatures. If passed, the proposed California bill would be the strongest pay transparency law in the country, according to the Society for Human Resources Management. On top of requiring job listings to include pay ranges, the bill would mandate employers to report all current employee wage and demographic information.

Many other states have some sort of pay transparency, or “equal pay” law on the books. Importantly though, these don’t always apply to job postings or companies revealing salary ranges. Instead, some so-called pay transparency laws (like Louisiana’s), simply ban company retaliation against workers who reveal their pay rates to each other. Others, like Nevada’s 2021 law, only require potential employers to reveal pay ranges for a job once an applicant completes an interview. Others still allow companies to hold back pay info until an applicant asks.

Pay transparency rules help to alleviate wage disparities, employees and job applicants want them, and they’re generally considered good for workers. But large employers like tech companies likely aren’t thrilled about them (even if they pretend to be).

Corporate groups representing big hitters like IBM and JP Morgan previously publicly opposed the New York City measure.

In Colorado, where job postings have been required to include salary ranges for more than 18-months now, some companies tried to get around the rule by moving listings to remote only positions and excluding Coloradans from those roles.

And, in a report from Axios, a researcher from the consulting company Gartner said, “I had a manager tell me recently that pay transparency sounds great, but now I have this wonderful employee who is probably going to leave because they’ve realized that they consistently get strong performance reviews and make the bottom of that salary range.’” To which this Gizmodo writer says: Maybe pay your “wonderful” employees what they deserve????