Time to Sharpen Your Pencil: Washington’s New Salary Transparency Law

With the crunch of autumn leaves right around the corner and kids returning to school, employers in Washington are sharpening their pencils in preparation for the new salary transparency requirements taking effect on January 1, 2023.

What Are the New Requirements?

Following similar laws in California and Oregon, the Equal Pay and Opportunities Act in Washington originally went into effect in Washington in March of 2018. Since then, it expanded in July 2019 to include a salary history ban, and now a salary transparency amendment, requiring employers to post a salary range with each external job posting. In addition to the current requirements to provide a salary range internally upon request, here is what the law will require beginning January 1, 2023:

• For Washington employers with 15 or more employees, each job posting must include the wage scale or salary range for the job, and
  
  
• A general description of all the benefits and other compensation to be offered to the hired applicant. The law states that “each job posting” means every posting online or in print, whether recruited directly or through an outside recruiter.

What Covered Employers Need to Do Now:

1. Review your organization’s pay grades. Some organizations may not have these, and now is an excellent time to put a system in place. You will need a minimum (starting pay), midpoint, and maximum for each job. If you already have a system, review it and make necessary changes.
   
   
2. Review where individuals fall within these grades, and check for any “green-circled” individuals. These are employees who are being paid under or near the minimum, or significantly less than others in the same job, and could include persons of protected classes such as women or people of color. While often not intentional, it can present a significant risk to your organization and must be corrected. On the other hand, “red-circled” folks are those nearing or over the maximum of a pay grade. Consider paying them a cash lump sum or bonus instead of increasing base wages. This recognizes their efforts and service length while preserving pay grade equity.
   
   
3. Decide on market adjustments for those green-circled employees and apply those—or increase your annual compensation budget and apply them when you do your regular pay increases. Making adjustments before the law goes into effect will be a proactive and trust-building exercise with your employees.
   
   
4. Build a communication plan and roll that out to your employees. As part of this, consider posting your pay grades internally before the end of the year. Communicating often and early builds trust with your employees.
   
   
5. Finally, ensure that your job postings comply with the new law, effective January 1, 2023. If not, Labor and Industries (L&I) is prepared to impose penalties and fines for non-compliance.
   
   
6. To save time, include a link to a separate page on your organization’s website that details employee benefits.

What to Expect from Employees:

For employers that communicate and are transparent regarding pay, many employees will likely be satisfied and reassured that they understand what to expect. But some employees may complain that they are not paid fairly. Be prepared to listen, and when warranted, make adjustments.

What to Expect from Applicants:

Expect applicants to negotiate using the new information. Keep in mind that virtually all employers will be required to post salaries, which should create a more level playing field within occupations and industries. Additionally, posting salaries will likely assist recruiters with open communication about the level of the job and the pay available.

Above all, a bit of preparation and additional budget dollars will be your best course of action with these new changes.

Eligible Archbright members are welcome to contact the HR Hotline for assistance, and we’ll be happy to help you navigate through this change.