The Pros and Cons of Pay Transparency

Written by Ravi Sattiraju on April 14, 2018

In the past, nobody talked about salaries. Companies certainly did not disclose pays to all employees, and employees were discouraged not to discuss them with colleagues. It was considered rude to discuss finances, and it simply was not done.

Things are changing in terms of pay disclosure. Companies are focusing on pay equality, especially between the genders. They want to stay on top of hiring trends so they stay competitive. Therefore, they are engaging in a practice called pay transparency. Pay transparency refers to companies making the wages of each employee known to everyone. This may refer to pay ranges or exact salaries.

This practice is still not common, with 82 percent of companies not disclosing salaries, according to a survey. And it appears that employees are happy with that. More than 60 percent do not agree with pay transparency, as they feel it would decrease employee morale.

While it may seem as though pay transparency may have many disadvantages, employers say there are some benefits as well. Read on to learn more about the pros and cons.

Pros of Pay Transparency

There are some benefits to disclosing pay, such as:

  • It allows companies to really see what they are paying employees so they can avoid instances of pay discrimination.
  • Applicants can see how much the company is paying and see if this aligns with their expectations.
  • It can eliminate gossip about suspected pay.
  • It can create an atmosphere of trust and increase productivity.
  • It gives employees salary ranges for other positions so they can pursue growth opportunities.

Cons of Pay Transparency

While pay transparency has some benefits, it has some downfalls as well:

  • If companies make pay ranges available (instead of specific salaries), they will be forced to pay salaries at the higher end of the range.
  • Disclosure of pay can make employees uncomfortable.
  • If the salaries are not fair and consistent, disclosing them could lead to anger among employees and even lawsuits.
  • Those who find that their pay is below market wage could experience reduced morale and even quit their job.
  • New employees may fear they will have no negotiation power in the future.

Don’t Hesitate to Contact an Experienced New Jersey Wage Discrimination Lawyer

Pay transparency is not a good idea for all involved. It does not seem to have many benefits for employees and employers. It can create hostility, jealousy, low morale and other issues. It also opens up an employer to wage discrimination lawsuits if an employee finds out that those in similar positions are being paid much higher wages.

Pay transparency only gives employees documentation to file a wage discrimination lawsuit. If you feel like you are being paid less than your colleagues even though you have the same education, skills, and experience, contact the New Jersey employment law attorneys at The Sattiraju Law Firm, PC for help. Many workers are paid less because of their gender, race, religion, disability or sexual orientation. If this has happened to you, we can advocate for you. Contact us at (609) 722-7026 to schedule a free consultation today.

Posted Under: New Jersey Employment Law, Uncategorized
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