So you’ve listed a job opening for a role at your company—let’s say it’s a junior position with room to grow. You’ve added a list of duties, nice-to-haves, need-to-haves, and a summary of your business’s culture. You comb through applications and cover letters, whittle down a list, and set up interviews. One candidate sticks out: They have the right experience, they interviewed well, and you genuinely liked them. Their references check out, too. They’re the perfect fit.
But all this time, you haven’t talked salary, and when you make the offer, they turn you down. They misunderstood how junior the job is, and they’re looking for something in a higher income bracket—leaving you with a rejected offer and a bunch of wasted time.
I hate to break it to you, but this entire exercise could have been avoided with one key move: including the salary range on the job listing. And starting in 2023, it won’t just be good business sense to list salary ranges on job postings — it’ll be the law in California.
On January 1, 2023, a new California law will require companies with 15 or more employees to start disclosing salary ranges on job listings for any job that will be done within the state’s borders.
If this is bringing up anxiety, let me assure you: This is a good thing. It’s a step toward increasing equity in the workplace, which protects you down the line. It can also streamline the hiring process, saving you precious hours.
But before the new year hits, you’ll want to get your house in order. Here’s how to prepare your small business to comply with California’s new salary transparency law.
What is California’s new salary transparency law?
The new law is broken down into three parts.
- Companies in California will be required to list salary ranges on job listings for any job that will be done in California
- Employers will be required to provide a salary range for any current employee’s job if they ask for it.
- Companies with 100 or more employees who are hired through third-party staffing agencies must submit pay data to the California Civil Rights Agency broken down by gender, race, and ethnicity — this article is aimed at smaller businesses, so I won’t address this particular aspect of the law.
Get your pay structure in order — it’s about to go public.
Remember that not only can prospective employees see salary ranges, but current employees can also see the range for their position. Now is the perfect time to systematize your pay structure — and, this is the part that might hurt a bit — aim to get people on equal footing.
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Look at all of the people in your company who hold the same role—and write down their salaries. How big is the range? Can you account for why the range is so big?
Next, set up a system for determining the range. You’ll need:
- A base pay for each role
- Levers that increase pay, like years of service, number of direct reports, or special expertise, education, or certifications that someone brings to the role
Once you have a system set up, put it into a document like your employee handbook and distribute it to your team. If you can’t bump everyone up right away to a standardized pay scale, get serious about a plan to do so over the next year—and don’t keep it a secret from your team. As team members start to realize there’s pay inequity, you’ll have some unhappy employees on your hands. But transparency about pay—and the ways in which pay can get increased—will save you time and stress, and it shows your employees that you value and trust them.
Speaking of which…
Make a plan for tough conversations with managers.
Employees might be angry when they become aware of pay inequity — and for good reason! Managers should be prepared to field questions and to provide assurance of changes to come. They’ll need to understand what the individual ranges are and be able to speak to the timeline for getting their team on equal footing. Managers should also get training around those levers we talked about earlier and how those apply to their department. (Think: A forklift license might mean pulling a lever for higher pay in some departments, whereas a project management certification might pull a lever on another team.)
This new law might have some growing pains, but with a little strategy and planning, it will lead to fairer, more respectful workplaces. With systems in place for salary ranges, you’ll be saved the headache of starting from scratch with each new hire, and your team will stand on a solid foundation of trust.