For the most part, salary transparency laws have become a beacon of hope for pay equity. But for small businesses, it's a double-edged sword that may stunt the retention and recruitment of talented workers.
There are currently 17 states in the U.S. that have laws around pay transparency, according to compensation management platform Pequity. And although more visibility around wages was and continues to be a much needed change, 16% of small businesses are already being impacted by the new legislation, according to recent findings from executive coaching organization Vistage, and it's presenting a challenge.
"The same rules apply for both [large and small companies]," says Joe Galvin, chief revenue officer at Vistage. "But the transparency laws that come into play are directly a challenge for small and midsize businesses because they [depend] much more on competing and retaining talent."
Salary transparency removes the cloak of compensation, according to Galvin. Large companies may also be struggling under the weight of pay transparency laws, which require companies to disclose the salary range on all posted jobs including promotions and transfer opportunities. But the nature of the beast is much different. For larger organizations, who can typically pay more because of their size and revenue, pay transparency laws can help achieve pay equity, and help companies chip away at discrepancies in pay born out of oversight or even bias.
Small businesses, given their size and...
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