Are Wage Transparency Laws Working? How Leaders Are Skirting Around New Legislation

As wage transparency laws sweep across the country, employers are finding stealthy ways to water down pay ranges.   

In places like New York City and Colorado, pay ranges are required to be featured in job postings. However, sources have suggested that what is often listed as the high-end of pay may actually be mid-range. 

“It has come up a lot,” said Melanie Naranjo, vice president of people at compliance training company Ethena. “Part of the challenge here is that pay transparency is new, so there is this fear among HR people about this new information, that people will not understand it. So the feeling is, ‘Let’s help cushion this, so we are not pressured.’ Do I think it’s the right approach? No.”   

New laws have certainly been up for interpretation in the eyes of many employers, with some low-balling salary ranges in order to alleviate pressure to meet high expectations. However, HR leaders warn that doing so will only add fuel to the fire and deplete a company’s reputation in the eyes of future prospects. 

According to Justin Hampton, founder of CompTool, high-end salary pay should range somewhere around 40% to 60% above the minimum wage. However, data from over 12 million job listings shows that high-end pay sits at an average of 28% above minimum wage.    

“Employees are not stupid,” said Naranjo. “What will happen for those employers [who lowball ranges], is that employees are going to take the job offer and then say ‘Wait, there’s actually a different salary band?’ And then you erode trust.”