The Power of Pay Transparency: Building Trust & Navigating Compliance

Pay transparency is no longer optional—it’s a key driver in building trust, promoting fairness, and strengthening recruiting strategies. As regulations evolve and workforce expectations shift, businesses must navigate compliance challenges and strategically adapt to stay ahead.

Summary

In this episode of Advancing Talent Acquisition, Advanced RPO’s Jenna Hinrichsen sits down with Justin King to unpack one of the most talked-about topics in talent acquisition: pay transparency. With shifting regulations and evolving workforce expectations, pay transparency is no longer a choice—it’s becoming a necessity. 

Justin shares his expertise on the internal and external impacts of pay transparency, exploring how it builds trust, promotes fairness, and enhances recruiting efforts. He also breaks down the complexities of compliance, the challenges organizations face when implementing transparency policies, and how businesses can strategically prepare for evolving regulations. 

Episode 3

Jenna Hinrichsen
Welcome to the Advanced RPO Podcast, Advancing Talent Acquisition, where we bring you insights, tips, and trends from today’s recruitment industry experts. Today, our guest is Justin King. Welcome, Justin. Can you tell us a little bit about your background to get started?

Justin King
Thank you. Yeah, so I’ve been with Advanced for almost three years now. The last seven or eight years of my career, I’ve been in the solution design side of things. So, I get to work with companies, all shapes and sizes, across all different industries to understand what issues they’re having with their TA programs, where they would like to go. And then we figure out the people, process and technology to get them there. So, kind of a cool job because I get to see so many different programs and get insight to a lot of different things and share best practices. So excited to talk to you today about pay transparency.

Jenna Hinrichsen
So, our topic today, just to back up here, Justin and I are colleagues, and pay transparency is our topic today. And it’s something that we’re both very passionate about and something that is not going away. So, we wanted to really bring we’re seeing in the market and some of our expertise around what we think is likely going to happen, how we feel about pay transparency. And so, let’s just kick right off. And Justin, if you want to, start at the baseline and just tell us what is pay transparency.

Justin King
I think it’s good to start there. It might seem remedial, but a lot of people, I think, have a bit of misunderstanding. It’s not just showing what you’re paying to potential candidates. That’s part of it. That’s the external side of things. There’s also the internal side where you have to have transparency on what a position pays within the organization. And that’s where a lot of the heartburn actually comes from for companies. Showing what they’re paying to the external market can be a little bit of a hard pill to swallow sometimes, especially if they’re not in a competitive pay range, but where you find the true troubles are where you have that inequality or the hard feelings internally when someone who’s been working out that new people are being started in the same pay rate as what they’re being paid and they have 15 years of experience. So that’s really where it is. There’s some adjacent type laws or things that go with it that we’ll talk about as well, but that’s it in a nutshell.

Jenna Hinrichsen
What are some of the benefits would you say for pay transparency? We know that there’s a lot of opinions on both sides, but let’s start with some of the benefits of pay.

Justin King
I think one of the biggest ones is that it builds trust and promotes fairness across the board. So builds trust with your external candidates when they see that you’re being transparent about what this pays and they don’t have to go through the process to see if it’s going to fit their needs. That is a trust building thing. It seems like there’s all the cards are on the table. It does actually build trust internally as well. There can be some of those hiccups at the beginning.

But once you are transparent, it’s a lot easier to have conversations about growth. The fairness side of things, when you have to show what is being paid, you can’t hide anything. So, it promotes fairness to make sure that if is job, they’re getting paid the same as someone else who’s doing that job, regardless of any external factors. It really can actually help with the recruiting efforts too, that’s something that we see. I call it the awkward dance when you have a that says, what does this pay? And you say, well, what are you looking for? And they say, well, give me a range. And so, it’s that back and forth side of things. It makes it easier on the recruiter to build that relationship. And then also, if we look at like ZipRecruiter, I think they did a study and found that around 75 % of employers felt that it increased candidate quality and postings with salary received 50 % more applicants. So, they’re seeing better applicants and more of them with that. If we look at it too, like when we see with the fairness, it encourages merit-based pay because if you’re going to put out a pay transparency program and you’re going to adopt that either just because you’re forward thinking and want to get ahead of it, or if you need to for legal found was 30 % reduction on intent to quit PayScale put that out due to openness path to raises. So in order to facilitate that, you really need to put together a program that says, okay, here’s the pay range for a position and here are the steps or what you need to do to get to the next level of that position.

The last one is it simplifies compliance. Most of this is being driven by compliance anyways. Why most companies are adopting it because legally they need to in whatever state they’re doing business. So, this just makes it simple. your T’s and dotting your I’s, you won’t have any issues when it comes to compliance if you go ahead and adopt.

Jenna Hinrichsen
I think two things on my end. It’s one of those things where we’re not used to it. And so, it’s a change and people don’t like change. And so, it’s going to force companies to change the way they manage information about how they hire. I think over time, we’ll look back and it will feel very natural. It won’t feel so invasive like it does right now to employers. The other thing I think is that hiring managers are a lot of times in a position to decide on a salary and there’s not a lot of objectiveness, if that’s a word, in that you could have one manager that feels one way about salaries and one manager that feels another way about salaries and they’re making decisions subjectively and that’s not really fair to talent coming in. So, if you have organizational wide that would ensure that candidates and employees are getting paid the same within the same range,

I think to your point, I mean, it goes back to fairness and consistency across the board. So, tell us why some employers are resistant to pay transparency.

Justin King
The biggest one is the internal it can cause So when we say pay transparency, there’s a few companies that have put out there and they just list what every single person makes. We’re not talking that side of it. We’re talking about understanding what a position’s range is or where a position falls within the pay scale. But that can create internal conflict. There can be jealousy that goes along with that. There can be lower morale rates overall when people feel like they are not getting paid what they should because they think they do a better job than Frank over in accounting, but his pay is so much higher. So that’s the big thing that comes in there. That can lead to a decrease in motivation as well. Those on the lower end of a pay scale or pay range for a position end up feeling slighted typically. Even if it’s laid out to them that you have X number of years and this skill set within this position and that means that you are at this pay rate. And those then at the top feel that they are content and sometimes that can slow things down because they say well, I’ve reached the top I’m doing better than everyone else maybe I don’t need to worry about it as much. So, you can have that on both sides. as well. So, when you put a range out into the market, there are two numbers typically, know, a low and a high. There is one that all candidates see and that’s the high. So, it can give you some issues there. meant to accommodate, you know, all the different skill sets, geographies, experience levels, but we still just see the top end. Now on the flip side, if you don’t put a range out, the market will start doing that for you. know, places like Indeed will just assume. So, it’s a double edged sword there. You know, you get something and you give something. It can oversimplify compensation paint employers into a box a little bit with the ability to negotiate or to pay appropriate wages for your extreme high performers. So, a lot of times when you have to really build out what this looks like, there’s not a spot for certain people who add immense value, you know, but need to be paid appropriately for doing so because they don’t quite fit into the norm. I think it was the Bureau of Economic Research did a study and they saw a 2 % reduction in overall wages that they tied back to pay transparency. There’s a few things in there with that. The last one I’ll throw out there is the cost to implement. Not always dollar sign, which it can be. I mean, some companies are going to use an external third party to help them do this. Otherwise, you’re going to have to devote HR, legal, accounting. There’s a lot of people that get involved, so a lot of internal resources. And then there’s the headaches that come with it too. So that’s why a lot of times, companies are waiting until they have to to do this because they see it as not fun.

Jenna Hinrichsen
It’s putting some work on the employers’ plates where they have to go to your point about having an explanation from the low end to the high end. The employers really have to get specific about where candidates fall into that. They have to be more transparent with that. And that’s going to put work on their plate. I also think that employers are not always revisiting comp plans, right? So, it’s we put this comp plan in place, we leave it there, that’s our comp plan. This is actually going to force employers to be constantly revisiting. Are we within a market range? Are we overpaying? Are we underpaying? Where are we sitting? So, I think it just overall puts more accountability on the employer, which, you know, when we’re talking about cons or why employers aren’t overly excited about it, it’s creating that extra work.

So, we’ve seen in the last couple of years several states start to implement laws and cities specifically implementing laws around pay transparency. What are your thoughts on a federal mandate around pay transparency? We haven’t gotten there yet but I see that on the path. What are your thoughts on that?

Justin King
Yeah, it’s definitely something that would simplify things. Because like you said, right now, this is being driven by state and local government initiatives. So, like you have California, New York, Colorado, I think they were the earliest adopters, and they have different laws than like Connecticut and Nevada. And so, it makes it tough for a company that works nationwide. You know, there’s a lot of thought that goes into it because one, have to post the pay when I post the position. Another one, I have to disclose if I’m asked. So, there’s a lot of nuances that go along with it. And then there’s the pay history bands that are adjacent to it, the pay data reporting in California and in Illinois, where you have to actually report out on some of the numbers to make sure that you’re not having any discrepancies across different classes, race, gender, whatever it may be. So, there’s a lot of variance within that. So, if we had a national, you know, kind of law or mandate that went with that, it would make things a lot simpler. Now, it is very tough to make things happen on a national level of this sort. So, it will be quite a fight to get there. Likely we will we’re a little ways out from that. But overall, I think that for everyone, it would make things simpler.

Jenna Hinrichsen
And especially remote work and people working from different states with for employers in other states, eventually there’s going to have to be something that creates some unity across that. And that gets really complicated if an employer is in Illinois, employee is in Montana. Like understanding the laws around that, is it based on where the employer is located, where the employee is located? And so it’s going to force us to look at it on a federal level, which I think is going to ruffle some feathers, but it’s something that probably needs to happen.

Justin King
And I think as we look at it too, you know, there’s, ways to go about it to make it less painful for a national mandate. If we look at minimum company size that are required from a national side of things, I think, California and Washington, require 15 plus employees before you have to…

Jenna Hinrichsen
Illinois as well now as of 2025.

Justin King
And then New York’s like four plus, you know, so they could look at this from a small business perspective. And for a national level, you could probably make that number much higher for the number of employees because, know, a five person business is very small, you know, that’s, and that’s much different from a 5,000, but a 5,000 person business versus a 100 person business is also a big, big discrepancy. So I think there’s some ways to make it a little bit more palatable for a nationwide mandate.

Jenna Hinrichsen
Agreed. Yep, it’ll be interesting to watch it play out. One last question for you. what would you say is your top career tip or piece of advice people? It doesn’t have to be on this topic, obviously, you know, just people in general. What’s your top career tip that you’d like to share with our audience today?

Justin King
Yeah. So, I guess when it comes to me and something that’s always served me well is, to, be your own advocate. If you want to grow, you need to let people know that you want to grow. And sometimes that isn’t just telling your manager, Hey, you know, how do I move up? You know, but be proactive about it. Look and see where you can add value. Always try to add more value than what your job description asks for because that in all reality is what you should be able to do in order to get a promotion. So, if there’s a special project, raise your hand, let them know that you’d be happy to help. And that also lets you push towards things that interest you rather than just waiting for someone to come to you and say, hey, would you be interested in this role? You’re not really, but you wouldn’t mind the pay bump. And so you go down that. So if you have an interest, if there’s something you’re good at, lean into it and figure out how you can add more value in your current role.

Jenna Hinrichsen
And I think you have to ask for it. I think there’s a misperception that a lot of times people are just given promotions and that may happen in some companies, but that’s definitely not the norm. I think the people that get promoted are really doing what you’re saying and they’re putting themselves out there. They’re asking for it. do the risk analysis on it. What’s the worst that can happen? Your employer says, no, you’re not in any worse shape than you are right now. So don’t get about asking something like that because you really have nothing to lose, It’s you putting yourself out there and saying, I think I’m worth this. put that bug in your employer’s ear and see where it goes. So I love that. I love that tip. I think that’s great.

This topic on pay transparency is something that is, as I said in the beginning, not going to go away. So Justin and I are going to likely do a follow up on this to talk more about, as this evolves, things are changing in different states and as we talked about from a federal mandate, but also what can companies be doing, some real action items that companies can be taking to prepare for this. So, stay tuned for upcoming episodes from Justin and I around pay transparency. And then for our audience, if you would subscribe to this podcast and if there’s any topics that you’re interested in hearing that we haven’t covered, please put that in the comments and we will add that to our list and we will do an episode on that. So, thank you very much Justin for joining us today. Thank you our listeners for listening in and we will see you next time.

Justin King

All right, thanks Jenna.

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