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  • Salary Transparency Laws and Career Centers

    March 14, 2023 | By Mary Gatta, Ph.D.

    Equity in Pay
    Silhouettes of a man and a woman on unequal ground.

    TAGS: compensation, salaries, legal issues, nace insights

    The Equal Pay Act, signed into law in 1963 by President Kennedy, prohibits pay discrimination based on sex. However, 60 years since the passage of the law, women continue to experience a pay gap, relative to men. Overall, women earned 83% of men’s earnings in 2022—a gap that has been persistent for decades. When we look across categories of race, the gap widens. Compared to white men, white  women earned about 79% of their earnings, yet women of color faced significantly larger gaps. Black women earned about 63% of white men’s earnings, and Hispanic or Latina women earned an estimated 58%.

    NACE’s own research of recent college graduates demonstrates that the pay gap exists from the first job out of college. Female graduates in the Class of 2021 were paid 83 cents for every dollar a male graduate earned. The American Association of University Women (AAUW) predicts that at the current rate of progress, the pay gap will not close until 2093.

    The pay gap exists, in part, because the endemic nature of salary discrimination means that individuals are often unaware that they are not paid fairly. In recent years, several states have passed laws that prohibit employers from preventing or punishing workers for sharing salary information with their co-workers. These laws help protect workers who share or seek out salary information and can help them know if they are being paid fairly. While important, these laws are dependent on women finding out salary information on their own, and then using that information to remedy a systemic issue of gender pay discrimination.

    In addition, states have passed laws prohibiting employers from asking a prospective employee their past salaries. Salary history can be a benchmark that employers could use as a gauge for the salary they will offer. This is problematic on several levels. If women experienced salary discrimination in past jobs, this discrimination would be carried into the new job, perpetuating the inequity. In addition, a salary that is informed from one’s wage history does not reflect the value of the job they are being offered.

    Over the past few years, we have seen a new group of laws emerge to address the implicit and explicit bias in salary negotiations. Research has demonstrated that when women negotiate salaries, they may be perceived as greedy or aggressive by employers, and their salaries come in lower than those for men. Also, a recent Harvard Business Review article noted that when women ask for raises—which they do at similar rates to men—they are less likely than men to get the raise. In addition, workers are often unaware of what a job should pay; therefore, they are often negotiating without full information.

    Salary transparency laws help to remedy this. A handful of states have passed laws that require employers to post the salary and/or a salary range for an open position. This helps to eliminate bias in salary negotiations and informs prospective employees on the pay range for a job. Research from the AAUW found that the wage gap is smaller in job sectors where pay transparency is mandatory. For example, in government positions, for which salaries are publicly available, women are closer to pay parity than in the public sector. Specifically, women working for the federal government earn 13% less than men. In contrast, in private, for-profit companies, where salaries are generally not transparent, there is a 29% difference in women’s and men’s salaries. Salary transparency can help us move toward more equal pay.

    In 2021, Colorado became the first state to enact a salary transparency law, followed by additional states and cities in 2022. These laws can be confusing for career centers posting jobs throughout the country. Shanna Fegely, an employment attorney with Hoffman & Hlavac in Pennsylvania, noted that, in part, this is challenging because each law is slightly different. New York City’s pay transparency law, for example, states it is an unlawful discriminatory practice for “an employment agency, employer, employee, or agent thereof” to advertise a job without stating the minimum and maximum annual salary or hourly wage. California’s pay transparency law, however, only makes it unlawful for an employer (not a third party) to not post the salary transparency information. On the other hand, Colorado explicitly provides that a third party sharing or reposting another employer’s job does not require compliance with pay transparency law and the ultimate liability falls on the employer whose job is being posted. Accordingly, the responsibility to post salary information depends on each state’s laws and how the term “employer” is defined. So it is important to assess how a state law defines “employer”—whether it is just the employer, or if the law also includes agents and third parties acting on the employer’s behalf. In these examples, the third party can be the career center.

    How should a career center proceed? Fegely recommends: “If a career center is in a state or posting positions that would take place in a state that requires pay transparency, the best practice would be to include the pay information in the posting.” Further, she notes that “if a career center is in a state that does not have salary transparency laws, but is posting jobs for states that do, the career center should comply with the state’s pay transparency law where the job is located. The key here is where the job is to be located. If the job is in a state with pay transparency laws, the posting should comply with those laws even if the career center is not located in that state.”

    In addition to understanding the state law, another helpful resource for career centers is MIT Career Advising and Professional Development’s pay equity resources. These resources, open to students outside of MIT, share one-page overviews by state that students can use to evaluate their job offers. These resources can help inform students on the laws that are impacting their job offers and their employment rights.

    The gender pay gap is a persistent systemic form of inequity in our labor market. Salary transparency laws are an important step in mitigating the discrimination and dismantling entrenched systems of gender biases in salary negotiations and pay.

    Mary Gatta, Ph.D., is the director of research and public policy with the National Association of Colleges and Employers .