How New Pay Transparency Laws Can Combat the Labor Shortage

With labor shortages still affecting industries across the nation, blue-collar fields like manufacturing and construction face a unique challenge to stay competitive in the hiring market. New pay transparency laws might just be their saving grace — not only do they help reduce disparities in employees' salaries, but they also create a framework for open and honest communication. This can help businesses retain talent and navigate the complex employment landscape. As more states pass similar legislation, HR teams should leverage these opportunities and prepare for what lies ahead. In this blog post, we’ll explore the most recent pay transparency laws as of 2024 and how these new regulations can support efforts to address the skilled labor shortage.

Understanding Pay Transparency Laws

For most of American history, employers have held more power in pay negotiations, as salary information was considered private and rarely discussed. However, this trend is shifting. With the aim of reducing wage gaps and discrimination, many states are enacting pay transparency laws that make salary information more accessible to job applicants and employees. These laws encourage open discussions around compensation, creating a more balanced negotiation process.

The specifics of these laws vary by state, but generally, they require employers to:

• Disclose the pay range for an open position at a specified point during the hiring process.
• Provide employees with the pay range for their role upon request, during transitions to new roles, or at the time of hire.
• Include the pay range in job postings.

The goal of these laws is simple: to protect employees from unequal pay and allow them to discuss salaries without fear of retaliation. Additionally, these laws foster discussions around compensation, giving employers a fair framework to compensate employees according to their skills and experience.

Current Pay Transparency Laws by State in 2024

Colorado was the first state to enforce pay transparency laws back in 2021. As of November 2024, there are 15 states with pay transparency laws on the books, including:

• California
• Colorado
• Connecticut
• Hawaii
• Illinois
• Maryland
• Massachusetts
• Minnesota
• Nevada
• New Jersey
• New York
• Ohio
• Rhode Island
• Vermont
• Washington

Each state's pay transparency laws are slightly different. Depending on where your business is located, you may need to adjust your HR procedures to be compliant with the respective regulations.

For example, in states like California, Connecticut, Maryland, Nevada, and Rhode Island, employers are legally obligated to share salary information when requested by a job candidate or automatically include it in their offer letter. While some states even require that you submit salary data to the state (California and Illinois being two of them).

Even if your state isn’t on this list just yet, it’s only a matter of time before pay transparency laws become the standard. And by being ahead of the curve, you can actually position your business to combat the labor shortage and reduce employee turnover.

Leveraging Salary Transparency in the Hiring Process

While revealing salary information may feel uncomfortable for some employers, pay transparency laws can actually make it easier to attract and retain talent in a competitive hiring market. And in skilled trades industries like manufacturing, construction, and home services, that’s exactly what’s needed.

Not only that but hiring managers will appreciate the time-savings that come with putting salary data out in the open — since it pre-qualifies candidates and creates a pool of applicants who are more likely to accept offers.

A LinkedIn study even found that over 90% of job seekers prefer applying for positions when the salary range is clearly indicated upfront. So it’s a win-win for businesses and job seekers.

By being transparent about salaries from the very start, employers can find better employees and build their workforce faster.

So consider proudly displaying salary and benefits details on:

• Recruiting materials
• Job posting on platforms like Indeed and ZipRecruiter
• Hiring advertisements
• Your website's "Careers" page
• Offer Letters

This can really set you apart from the competition, especially if they're still playing by the old rules.

What Is a Potential Disadvantage of Pay Transparency?

Everything comes with pros and cons, including the new laws related to pay transparency. For employers, the biggest disadvantage is that it can open you up to potential legal action if you fail to adhere to laws or regulations.

Pay transparency can also lead to tension and jealousy among employees if there’s a large discrepancy in salaries. That’s why it’s important to have clearly defined criteria for determining employee compensation before you start publicly disclosing salary details.

Another disadvantage is skepticism because of massive salary ranges (like $100,000 ranges and beyond). This can hurt the credibility of your recruitment process because it's really not "transparent" at all... Rather, it’s a way of avoiding disclosure. Candidates can sense that and are calling these companies out.

It's important to remember that while you may be required to share salary ranges, you could end up paying more or less than originally estimated to their eventual hire. So don't let the fear of pay transparency dissuade you from offering an honest range that you can stand behind.

Streamlining Pay Transparency with Team Engine

One of the trickiest parts about adapting to pay transparency laws is navigating the additional manual tasks they bring with them. From preparing job postings to publishing them on job boards, to pre-screening, scheduling, and tracking applicants — these processes can take up valuable time that could be better spent on other tasks.

That’s where Team Engine comes in! Our suite of features is designed with skilled trades employers in mind, allowing you to automate the hiring process so you can focus on the more important parts of the job — like interviewing and onboarding candidates.

Team Engine can help you quickly:

• Post jobs to a range of job boards
• Sift through resumes
• Prescreen candidates
• Schedule interviews
• Track and follow up with applicants
• And much more!

Plus our analytics tools make it easy to monitor data and make more informed decisions about your hiring process.

So if your business is ready to embrace pay transparency, Team Engine can be the helping hand you need to get it done quickly and efficiently. Ready to give it a try? Sign up for a demo to give it a try today!