Effective January 1, 2023 a new pay transparency law is taking effect for Washington-based employers with fifteen or more employees.
It’s important to understand why the equal pay act was created and what problems the law aims to solve. Start by making yourself familiar with the new WASHINGTON EQUAL PAY AND OPPORTUNITIES ACT, available here.
👉In Summary:
“The legislature finds that despite existing equal pay laws, there continues to be a gap in wages and advancement opportunities among workers in Washington, especially women. Income disparities limit the ability of women to provide for their families, leading to higher rates of poverty among women and children. The legislature finds that in order to promote fairness among workers, employees must be compensated equitably. Further, policies that encourage retaliation or discipline towards workers who discuss or inquire about compensation prevent workers from moving forward.”
Considerations:
- Employees are free to discuss pay with one another. In such cases, employer retaliation is prohibited.
- Employers may not ask applicants to share their salary history as part of the application and interview process.
💰Now, let’s define some important pay related terms:
Compa ratio: A measure that expresses current pay rates as a percentage of range midpoints. Where the midpoint of a pay range represents full market pay, the ratio of the employee’s actual salary to that midpoint indicates whether the employee is paid below, at or above market rates.
Pay range: A pay range, also known as a salary range, sets the upper and lower compensation limits for jobs within a particular pay grade at an organization. Traditional ranges are commonly 30 percent to 40 percent.
Position in range (PIR): Refers to the position of a pay rate relative to all pay rates in a range.
Range minimum: The lowest pay in a pay range.
Range maximum: The highest pay in a pay range. Typically no employees are paid over the maximum.
Range midpoint: The middle of your range, also known as a 1.0 compa ratio. Typically this is where you will position people who are fully performing the role; those who are not entry level or close to ready for a promotion.
For a list of compensation terms every manager should know, see this blog series from Payscale.
✅In our experience, there’s nothing more helpful than following a checklist so here’s one you can use once your organization already has pay ranges in place:
Psst: Find a downloadable version of this checklist as well as the internal timeline here.
✔️Give managers access to their team members’ pay rates.
Help managers understand pay by giving them access to ranges for their role and roles on their team. Remember managers are employees too and should be paid at least the range minimum.
Pro Tip: Compensation is just information. The more people see pay data, make informed decisions, and have ownership over what their teams are paid, the more comfortable they will be.
✔️Adjust pay for anyone who’s below the range minimum.
Conduct a compensation review for all employees; flag any who are below range minimum
Do a market adjustment where everyone is brought at least to the minimum.
Pro Tip: Don’t stop at the minimum! Increase pay to an amount that reflects each person’s skills and contributions.
✔️Update job descriptions with salary range & benefits details.
Review and update all descriptions for WA based jobs to include the salary range
Ensure that pay and benefits information are included on all job postings
Pro Tip: Consider what questions will come up from employees, clients, and others once pay becomes visible. Anticipate questions and include them in your FAQ.
✔️Develop FAQs to answer employee questions.
Increasing pay transparency leads to questions.
- Why was I below the minimum?
- How do I make more?
- If I’m paid the range maximum, does that mean I won’t get an increase this year?
- If I’m paid low in the range, why don’t I make more?
Create an FAQ (frequently asked questions) and use it to train your managers so they are comfortable talking to people about their pay.
Pro Tip: Create a “Rude FAQ” where you anticipate the hardest questions people will ask.
✔️Teach your managers how to talk to people about pay.
Train managers on why you pay how you pay, how to think about range minimum, midpoint, and maximum. Let them know your pay philosophy or “why we pay how we pay.”
Introduce new terms like compa ratio or position in range to help them better understand how compensation works.
Pro Tip: Prepare managers to communicate pay adjustments and answer pay related questions.
If your organization does not have salary ranges yet, SHRM has published a step-by-step process you can follow to create ranges and job families. Add between 4-8 weeks to do this, depending on the size of your organization.
Develop Your Internal Timeline Now
| DATES (2022) | ACTION | RESOURCES |
| Now through July | Give managers access to their team’s pay rates, and their own. | Types of Salary Structures and When to Use Them |
| July-August | Teach your managers how to talk to people about pay. Train, practice, and role play for best results. | How to Prepare Managers to Talk About Pay |
| July-August | Develop an FAQ to help your leadership team answer employee pay questions. | Include your philosophy and strategy; answer the question “Why do we pay how we pay?”
6 Salary Questions All Managers Should Be Prepared to Answer |
| August –
September |
Adjust pay for anyone who’s below the range minimum. Remember to make all corrections before you publish salaries in your job postings. |
|
| October – December | Update job descriptions and public posting with pay & benefits details. | How to Write a Job Description |
| December | Conduct a final audit to make sure your managers are educated, no one is being paid below minimum, and all job descriptions include salary & benefits information. |
Now, you can break for the new year knowing you’re doing your part to advance pay equity right here in Washington state. Find more information in this article from Seattle Met Magazine on The Value of Pay Ranges and impact of the new law.
If you need hands-on support with range creation, communication, or manager training we’re happy to help. Contact us at info@reverbpeople.com
