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Friday, March 31, 2023

Will California soon require payment data to go public?

Will California Soon Require Payment Data To Go Public?

by Grace Gede , CalMaters

If you’re one of the many Californians looking for a job, chances are you’ve run into some familiar frustrations: unclear salary ranges and benefits. And how do you know if the company is a good employer?

If two Democratic state lawmakers have their way, employers may soon have to disclose too much information about pay and internal practices. Both bills, working their way through the California Legislature, face strong opposition from powerful business groups, who fear the proposed laws could lead to unfair comparisons and costly lawsuits.

The bills are part of a larger push by states, the federal government, and in some cases, employers themselves, to make companies more transparent. California legislators have two goals: to reduce gender- and race-based pay gaps, while also increasing the quality of jobs.

Several states, including California, require companies to tell employees about job wage limits upon request, while Colorado, Washington and New York City have taken measures in recent years that require companies to put wage limits on job postings. Is. Intel has begun publishing data on how it pays its employees, and a growing share of the largest companies disclose some of the data on their racial and ethnic makeup.

Meanwhile, the chairman of the Federal Securities and Exchange Commission is interested in new rules that would require public companies to disclose data about how they treat their employees.

As California eases out of the pandemic and companies try to hire or retain workers, the time is right for legislation that zeroes in on “what it really means to be a high-quality employer,” said Ash Kalra. Said, chairman of the Assembly’s Labor and Employment Committee and a Democrat from San Jose.

pay gap

When Jessica Seifert applied to work at Riot Games, a video game company based in Los Angeles, the job description didn’t mention a salary range, she said. The company, known for its popular “League of Legends” game, first brought her on as a contractor in 2014 and then hired her full time to onboard new employees, she said. She found that a male co-worker was making $90,000 per year while she was making $70,000, and she began talking about salary with co-workers. The result: Women were often paid less for doing the same work, she said.

From his vantage point inside Riot, Seifert watched as applicants negotiate payment without knowing much about what to expect. “I think it was a lot of anxiety; I think it was a lot of shooting in the dark,” she said.

Gender- and race-based pay gaps persist across the United States. In California, the median annual wage for women is $50,313 while men earn $57,457, according to Census Bureau data. Meanwhile, according to the Public Policy Institute of California, more than a third of Californians were in poverty — on average less than $35,600 for a family of four — or near it in 2019. That year, 80% of poor Californians lived in a household with at least one working adult.

To bridge the pay gap, reduce working poverty, and improve job quality, legislators have turned to a single mechanism: making stuff public. A bill introduced by Democratic State Senator Monique Limon of Santa Barbara would require companies to include salary limits in job postings and to let employees know when promotion opportunities are available. For companies with 250 or more employees, pay data for 10 broad job categories will be published from 2026, divided by race and gender. For larger companies, the publication date is early. The bill would also require companies using 100 or more contractors to report contractor pay data.

Hopefully with more information about potential pay, women will be able to negotiate higher wages, said Jessica Ramey Stander, a bill sponsor, policy director for Equal Rights Advocates.

A second bill introduced by Assembly member Kalra, the first in California to make companies with 1,000 or more workers annually report a wide range of data on how the state’s labor agency treats employees— There will be a solution. Data includes workforce size, scheduling, salaries, internal promotions, benefits, security, turnover rates, equity and more. The labor agency will begin posting information online in 2024.

California comptroller and sponsor of the bill, Betty Yee, said the ultimate aim is to create a certification for employers who treat their employees well. Certification will come with benefits — perhaps a tax credit, or a better shot at getting state contracts — as an incentive. The data will also be condensed into something easier for the public to understand, such as nutrition labels on food.

“Why is all this information in a black box?” Rick Wartzman, who developed the data needed for the bill and tested the measures with some of the larger companies. Wartzman, who heads a center at the Drucker Institute, a think tank at Claremont Graduate University, thinks investors to job seekers will have their reasons for wanting a breakdown.

“Maybe you like to shop at places that treat their employees well, and you don’t want to patronize places that don’t, but how do you really know?” Wartzman said.

If salary data becomes public, what happens next?

According to LinkedIn, people find salary ranges useful in job postings. Another indicator: In the federal government, which includes salary in her job posting, women earn 93 cents for every dollar men earn, compared to the national average of 83 cents. And when women have a clear understanding of what to expect from a conversation, the gender gap narrows, according to a review of studies published in the National Bureau of Economic Research.

Research on countries and states that require companies to share salary data or report on their gender pay gap shows mixed results. Australia saw a decline in the gender pay gap across many of its companies by around four per cent, while the United Kingdom saw a small increase in the gender pay gap after a reporting law was instituted in 2017.

When researchers examined a Danish law that required companies to disclose pay data based on gender, they found that companies required to comply with the law reduced the gender pay gap by 7%, While other companies saw no change. Reporting companies were also more likely to hire women and promote female employees. But the way companies narrowed their pay gaps wasn’t by increasing pay for women, the researchers found — it was slowing pay growth for male employees.

As salaries become more public, the effect comes in two phases, said Harvard Business School professor Zoe Cullen. First, workers can use that information to increase conversations. But the second step is the company’s response: If they know that raising wages for one employee may lead to renegotiation with a group of other workers, employers can bargain more aggressively and set lower wages on average. Yes, Cullen said. A study he conducted looked at before and after states passed laws protecting workers who talk with each other about wages, and found that laws drop wages by about 2%. lead the.

In other words, the research suggests there is a tradeoff: Under transparency measures, the wage gap appears to shrink, but wages shrink on average.

When Colorado passed a law requiring companies to include salary limits in job postings, it faced yet another unwanted move from employers. In an effort to circumvent the law, some companies began posting roles that allow applicants to work from any state except Colorado. Since then, Washington and New York City have passed similar laws.

Pushback from business groups

The powerful lobbying operation at the California Chamber of Commerce has put both bills on its “job-killer” lists — a collection of measures they most aggressively oppose each year. The group’s self-reported murder rate of its “job killers” is high. In 2021, it had 25 bills on the list; One entered the law.

One of the chamber’s concerns with both bills is that publishing the data will not provide enough context about why certain pay gaps are fair, or why some businesses do not perform well on workforce metrics compared to other companies in their industry. We do.

For the bill that would publish wage limits and data, “our concern lies largely: what exactly does this data show about how it is being used?”, said Ashley Hoffman, a lobbyist for the chamber. The report may not have uncovered illegal pay discrimination, but Hoffman said, “What will the headlines be?” He also fears it could lead to costly lawsuits for the companies, which is part of the reason the group labeled it a “job killer”.

Limon, the state senator who introduced the pay range bill, said, “I know the opposition likes to say that this is a bill that is shameful.” “We do not believe it is shameful to make accurate information public.”

Hoffman said the workforce metrics bill could create unfair comparisons between companies. Companies have to share data on their entire US workforce, on a range of measures, including salaries. A company with a lot of workers in states with low cost of living may have a much lower average wage than a company whose entire workforce is in California, and has higher wages to match.

Another line of protest—from Kelly Ciarto, a Republican state assembly member from Murrieta—is that adding more rules and requirements for companies would harm California in attracting and retaining companies in competition with other states.

“While this may be the first in the country, I also see it as: We are guinea pigs. And I don’t know that we can’t afford to be guinea pigs anymore, especially when there is a need to attract businesses to California.” Here comes the matter,” Seyarto said at a hearing about the worker metrics bill.

Both bills will have to go through more committees in the Legislature before receiving the final vote. Assembly member Kalra’s workforce metrics bill has been placed on the “suspense file” – a temporary parking spot for bills to officially assess their financial impact, but often use to kill them with little public discussion. is done.

Ken Jacobs, president of the UC Berkeley Labor Center, said California has been a laboratory for progressive labor measures. He dismissed examples: the first paid sick leave law in America was passed in San Francisco. California and New York passed the first statewide $15 per hour minimum wage laws in a single day, he said, while San Francisco passed one of the first laws to address irregular scheduling. It “becomes a proof of concept when a state like California implements these measures,” Jacobs said.

Riot Games, like the concerns raised by Seifert, led to a class-action gender discrimination lawsuit filed against the company in 2018 because of its explosive reporting on the company’s culture of sexism. In December 2021, Riot agreed to pay $100 million in a settlement deal, most of which would go to current and former female employees in California. The company also agreed to a number of policy changes, including making its wage data reports available to employees upon request.

Seifert, who is no longer at Riot, now works as a recruiter. She said that she always talks about the salary range with the candidates. She doesn’t want to waste her time – or her own.

Grace Gede covers the California economy for CalMatters. Prior to this, she was editor of the Washington Monthly. He is a graduate of Pomona College. Contact her via email at [email protected]

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