Pay transparency is all the rage among the start-up set – not so much in the government contracting space. There’s almost an unwritten ‘don’t ask, don’t tell’ policy when it comes to compensation. In April the White House opened the door for greater compensation discussions with Executive Order 13665, which prohibited federal contractors and subcontractors from discriminating against employees or job applicants who discuss, disclose or inquire about compensation.
The executive order required the Secretary of Labor to propose a rule addressing pay transparency within 160 days. Last month the Office of Federal Contractor Compliance Programs did so, with a proposed rule barring ‘pay secrecy policies.’ The rule requires federal contractors and subcontractors to allow their employees and job applicants to discuss pay amongst one another and make inquires about pay with employers, without discrimination. The rule also requires government employees to make personnel aware of this nondiscrimination provision in their employee manuals or handbooks.
Why the need for pay transparency? Is the government going the way of start-ups and looking to have everyone’s pay published?
It all boils down to discrimination and disparity, according to the White House.
“Despite the existence of laws protecting workers from gender–based compensation discrimination for more than five decades, a pay gap between men and women persists today,” noted the OFCCP fact sheet on the proposed rule. The fact sheet also noted that annual wage data shows women make 77 cents for every dollar men make, and that Bureau of Labor Statistics Data (BLS) shows that African American women earn 68 cents and Latina women earn 59 cents for every dollar earned by a non-Hispanic white man.
The OFCCP acknowledges that occupational preferences play a role, but they’re also claiming discrimination is a factor – hence the need for new regulation.
What does it mean for recruiters?
Likely your hiring managers have the critical role of negotiating pay. But be sure that salary ranges for various positions are clear. Money is often left at the negotiating table, and if pay disparity begins to be a problem, and is built around gender or racial lines, you have a problem. Be aware of the formulas used to negotiate pay and how they factor in experience and geography. Make those factors clear in the hiring process. The more your potential hires are educated about what goes into pay, the less chance they have to claim they were unable to ask the right questions – bring up pay early and make it clear it’s a critical part of the conversation.
Also, now is a great time to open up a conversation with human resources about what pay means for your company. A growing number of start-ups are implementing full pay transparency. Meaning everyone’s salary is available, sometimes even publicly posted. Government employees are used to a certain degree of pay transparency. The General Schedule salary ranges are posted online so within a 10-15k window, it’s clear what your government peers are earning. There is some merit in offering a similar degree of transparency. If you note that similar hires are ending up with final salaries of great disparity, be prepared to address that so you’re not hit with pay discrimination complaints later.
What does it mean for employees?
If you’ve always wondered if your pay is fair but were afraid to ask, it seems the moment is now yours. Few would say that going up to a co-worker and asking salary details is a good idea. But you can certainly ask your hiring manager what the salary range is for your position, or your boss what they see as your potential salary growth. If you do decide to bring up numbers with a peer, keep other factors in mind – including workplace flexibility, benefits and seniority. If you find you’re making significantly less, be straightforward in bringing the problem to your boss’ attention. Try not to be defensive, and try not to bring a co-worker into the conversation. At the end of the day, you want your salary to be based on your unique attributes and skills – convey how those unique attributes and contributions should be garnering a salary more commensurate with a fair market standard.
If you’re a job seeker, do your research on appropriate salary ranges before you go in for any interviews. It’s never a good idea to be aggressive about salary before you’ve gotten a job offer, but it’s a good idea to be aware. If an offer comes your way, be assertive when it comes to salary negotiation. If relocation is an option down the road, consider asking what a similar position may earn in another location. Knowledge is power, so arm yourself with independent research and also ask smart questions of your hiring manager.
For more information on the OFCCP proposal, visit www.dol.gov/ofccp/PayTransparencyNPRM.