Compensation transparency

Wage transparency, salary compensation, and compensation transparency generally, involves disclosure of employee compensation amounts, either among other employees in an organization, to owners, to government regulators, or to the public.

Some jurisdictions have pay transparency laws intended to prevent discrimination based on demographics like gender or race. These laws require job listings to give a salary range for the position. To eliminate unintentional discrimination and treat employees more ethically, some organizations have adopted radical transparency, disclosing all employees' compensation internally and either equalizing pay for similar positions or justifying differences.

Some jurisdictions mandate disclosure of executive compensation to shareholders, in an attempt to reduce excessive compensation.

In the United States, the National Labor Relations Act protects the right of employees to discuss compensation without retaliation from their employer.

Laws Regarding Compensation Transparency

The following laws are word for word from ADP in order to maintain accuracy and integrity of the law.

Statewide Laws

California

"Upon request, all employers must:

• Provide an applicant with the pay scale for the position they applied for (even before the initial interview).
• Provide an employee with the pay scale for their current position.

An employer with 15 or more employees must include the pay scale for a position in any job posting. If the employer engages a third party to announce, post or publish a job posting, the employer must provide the pay scale to the third party. The third party is required to include the pay scale in the job posting."

Colorado

"In each posting for each job opening, all employers must disclose:

• The rate of compensation (or a range thereof); including salary and hourly, piece, or day rate compensation; that the employer is offering for the position.
• A general description of any bonuses, commissions or other forms of compensation offered for the position.
• A general description of all employment benefits offered for the position."

Connecticut

"All employers must:

• Provide a job applicant with the wage range for a position the applicant is applying for, upon the earliest of the applicant's request or before or at the time the applicant is made an offer of compensation.
• Provide an employee with the wage range for their position upon their hiring, a change in the employee's position with the employer or the employee's first request for a wage range."

Maryland

"Upon request, all employers must provide an applicant with the wage range for the job for which the applicant applied."

Nevada

"All employers must:

• Provide the wage or salary range or rate for a position to a person who has completed an interview for the position.
• Provide the wage or salary range or rate for a promotion or transfer to a new position to an employee who has applied for the promotion or transfer, completed an interview for the position or been offered it and requested the wage or salary range or rate."

Rhode Island

"All employers must:

• Upon request, provide the wage range for the position for which the applicant is applying.
• Provide an employee the wage range for the employee's position at the time of hire, when the employee moves into a new position and upon request."

Washington

"Employers with 15 or more employees must, in each job posting for each job opening, disclose the wage scale or salary range and a general description of all benefits and other compensation.

Upon request of an employee offered an internal transfer to a new position or promotion, the employer must provide the wage scale or salary range for the employee's new position."

Local Laws

New Jersey local laws

Jersey City, New Jersey

"Employers with five or more employees that advertise by any means to provide notice of employment opportunities, transfers or promotions must disclose a minimum and maximum annual salary or hourly wage in the posting or advertisement."

Ohio local laws

Cincinnati, Ohio

"Employers with 15 or more employees within Cincinnati must, upon request, provide the pay scale for a position to an applicant who has received a conditional offer of employment."

Toledo, Ohio

"Employers with 15 or more employees within Toledo must, upon request, provide the pay scale for a position to an applicant who has received a conditional offer of employment."

State and Local Laws

New York state and local laws

"Effective Sept. 17, 2023, employers with four or more employees must, when advertising a job, promotion or transfer opportunity, state the minimum and maximum annual salary or hourly wage for the position. For positions compensated solely on a commission basis, employers can comply with the law by including a general statement that compensation will be based on commissions. Employers must also disclose the job description for the position, if one exists.

The law applies to advertisements for positions that will physically be performed, at least in part in New York, as well as jobs that will physically be performed outside of New York but report to a supervisor, office, or other work site in New York."

Albany County, New York

"Employers with four or more employees are required to state the minimum and maximum salary or hourly wage for a position when advertising a job, promotion or transfer opportunity. This requirement does not apply to temporary jobs at a temporary help firm."

Ithaca, NY

"Employers with four or more employees whose standard work locations are in the city of Ithaca must include the minimum and maximum hourly or salary compensation in each posting for a job, promotion or transfer opportunity. The ordinance does not apply to job advertisement for temporary employment at a temporary help firm."

New York City, New York

"Employers with four or more employees (including independent contractors but excluding temporary employees hired through temporary help firms) are required to disclose the expected salary range for a position on internal and external job listings. Positions that cannot or will not be performed, at least in part, in the city of New York are excluded."

Westchester County, New York

"Employers with four or more employees must include the minimum and maximum salary in each posting for a job, promotion or transfer opportunity. The law applies to a posting for positions that are required to be performed, in whole or in part, in Westchester County, whether in an office, in the field or remotely. It does not apply to job advertisement for temporary employment at a temporary help firm.

The law will become null and void on the day that similar statewide legislation goes into effect. As such, the Westchester County law will no longer apply as of September 17, 2023."

The Western Money Taboo

According to a study conducted on 2,000 adults, more than half of them, that is, 56%, consider discussing financial matters with others to be a "taboo" topic. While the reasons behind the taboo surrounding discussions about money are unclear to a majority of people (81%), a survey revealed the most contentious financial topics people find difficult to talk about. These include asking about their parents' financial situation (51%), debt (45%), and wills (43%).

Debt is considered such a sensitive topic that almost 58% of people admitted to faking their financial stability on social media.

Even though most respondents (76%) describe themselves as transparent, in actuality, 63% admitted that they would never discuss financial matters during family meals. The research, which investigated the financial difficulties experienced by Americans, was conducted in collaboration with Questis by OnePoll.

There are many theories on what causes this taboo in Western culture. An article from the Clinical Social Work Journal: "The Money Taboo: Its Effects In Everyday Life and in the Practice of Psychotherapy" gave a few different explanations for it.

The first theory was introduced by Freud (1908), which links money to feces and anal eroticism, indicates that feelings of shame play a crucial role in people's reluctance to talk about financial matters. A fixation on wealth is considered inappropriate or distasteful. Moreover, associating money with other intricate issues, such as power, sex, love, or narcissism, can lead to hesitancy or reluctance to discuss financial matters.

The second theory is a sociological explanation. Lloyd (1997) posits that in a society that proclaims itself to be both a meritocracy without classes and a capitalist utopia, there is no level of wealth that is socially acceptable. This contradiction compels us to feign equality while acknowledging that income determines vastly different opportunities. As a result, discussing money requires either the use of euphemisms or avoiding the topic altogether. (Lloyd, 1997, p. 50). For this information the article utilized an old New York Times article: “Cents and sensibility–we readily talk about our addictions, so why can't we discuss our dividends?” from 1997 which is no longer available but would have this citation: Lloyd, Carol. (1997). “Cents and sensibility–we readily talk about our addictions, so why can't we discuss our dividends?,” NY Times Magazine, Dec. 28, 50.

A third theory was Fenichel's explanation, grounded in Marxist theory, suggested that the widespread notion of financial matters being "indelicate" serves a particular function in social ideology. This function, he argued, has a negative purpose: limiting knowledge and discussion of financial matters creates illusions about the true state of affairs regarding wealth acquisition, which benefits the ruling class. Therefore, keeping the working class from clear thinking about money is a strategy employed by capitalists to maintain their dominance.

While there is no clear answer as to why a taboo exists surrounding American finances, learning more about the theories surrounding the topic allow audiences to form their own opinion as to where the taboo originated.  

See also

• Equal pay for equal work#Transparency laws