Employers of 100+ employees with even one employee living in California and California employers with 15+ employees just got handed a stack of paperwork that’s due May 10, 2023. You can read more about that in Part 1 of my pay transparency series.

And if you don’t employ in California and are thinking this doesn’t apply to you, think again. California isn’t the first state to pass a sweeping pay transparency law, but it is the biggest and this will have both immediate and long term affects for the rest of the country.

So the question is…how do you prepare for the new pay transparency requirements?

Document, Document, Document…

If you, like most companies throughout the brief history of our country, have done your hiring and compensating as needed and on a case-by-case basis, you may have some work ahead of you. In order to meet the reporting requirements for the new law, you’re going to need to document several things.

Document and standardize your job titles and pay ranges. You need to make sure that every role and employee in your company has a job title with an associated pay range. Of course, this could bring up some information that will need resolving. For example, if you have 10 people in the role and only 9 of them are within the pay range you’ve created for that role, you’ll need to address the situation and quickly! Legislation requires pay ranges be posted effective January 1. And be available upon request by all employees.

As a note, this actually does get to the root of the intent of this law, which is ultimately the goal of achieving pay equity through reduced ambiguity of pay levels, but in the short term is likely to uncover problems and create additional work for every organization.

Document every single employee, their job title, and their current pay. You’re going to need this information for the reason listed above and also for reporting purposes. If you’ve hired contract workers, you’ll need to document their information as well.

Document your compensation structures. Having a carefully planned compensation structure is essential to meeting the requirements of this new law. If this is something you’re struggling with, feel free to reach out and I can help. You can also check out my guide to sales compensation for the steps to creating a solid variable compensation plan. 

Analysis and Action

Once you’ve got everything documented, take a look at your data. There’s a story, and if you don’t like what that story is telling you, you may need to address some issues sooner rather than later.

I’ve already mentioned one example. If you notice that one or more of your employees falls outside the range of pay for the job title they’re working for, you’ll need to correct that situation. You’re also going to need to start analyzing the pay within a role for different categories like gender, race, and ethnicity. Now’s the time to look for inequities and create plans to resolve those inequities.

Again, the intent of this and other pay transparency laws is equity and fairness. While the reporting and punitive structures will be burdensome to businesses, the goal is worth pursuing.

Get Ready

As you’re preparing your documentation and doing the analysis, it’s important to remember that you’re not operating in a silo. Your managers and employees are going to have questions. Start developing a plan to get in front of the story and give them the information they need in terms of their rights and responsibilities.

Now’s the time to create training programs for managers to start keeping more detailed records so that reporting will be easier in the future.

Like it or not, this is happening. There are likely going to be many conversations about the pros and cons of this law (which I’ll be addressing in my next post), but the bottom line is, we have to get ready. While it can be overwhelming up front, the sooner you get your documentation in order and begin correcting any issues that arise, the sooner you can put into place processes that will help you operate more smoothly in the future.

Stay tuned for more on pay transparency.