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U.S. labor trends: the state of fair pay, equity and transparency

Human resources (HR) professionals may have noticed some stabilization of the labor market during 2023, but that doesn’t mean the introduction of legislative and regulatory requirements has followed suit. Remote work has brought the issues of fair pay, equity and pay transparency to the top of the priorities list for HR professionals. Add on the layer of multistate compliance for many employers, and the challenge to remain compliant becomes even more complex.

Baker Tilly Vantagen senior manager, Deanna Kempinski, authored an insightful article for around the state of fair pay and how to navigate the regulatory challenges that come with it. Some of the points shared in the article include:

  • The roles of communication and process
  • The cost of denial: fines and penalties
  • Pay equity solutions

Key takeaways from the article

  • There is currently no federal regulation regarding pay transparency, but the Salary Transparency Act and Pay Equity for All Act could mandate all U.S. employers to disclose wage ranges and prohibit employers from asking candidates about salary history during hiring if enacted.
  • Effective employer communication around compensation practices is crucial, even without regulatory requirements. Be prepared to be able to justify the rationale and decision-making process behind your practices.
  • Be mindful of pay challenges that may arise between long-term employees and new hires, since market conditions and internal pay practices don’t always align and can lead to significant pay gaps or compression.
  • Gen Z and millennial employees are more likely to discuss their salaries with coworkers. Younger workers are also more likely to manage their careers based on compensation growth, incentive rewards and promotional opportunities commensurate with performance.
  • Employers should expect to face consequences for non-compliance with existing regulations around fair pay, equity and transparency, which may include state agency investigations, lawsuits, corrective action and civil penalties.
  • There are multiple resources available to help develop transparent and equitable compensation practices. You can also engage a third-party consulting firm to conduct a comprehensive compensation analysis for your organization.
  • The movement towards fair pay, equity and transparency is likely to continue and taking a proactive stance to address these topics is highly advisable.
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Multistate payroll and human resources compliance management

Employer State Compliance Roadmap

Remote and hybrid work are here to stay -- and your company needs to ensure it's up to date with the latest HR and payroll compliance regulations in every state it has employees. Catch up on the latest with Baker Tilly's Employer State Compliance Roadmap.

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