Pay Transparency: 5 Tips for Leaders

New pay transparency laws could lead to some uncomfortable questions for leaders. Here's how to handle them.

Can you keep a secret? Neither can your employees.

Nor do they have to. Not only is it illegal under federal law for private sector employers to prohibit employees from discussing pay, but in some states, the laws go so far as to require employers to disclose pay ranges to employees or job applicants.

One-fifth of all U.S. workers are covered under pay transparency laws, and experts predict the trend will grow. Pay transparency refers to companies being open about the compensation provided for current and prospective employees as a step toward pay equity.

As a result of pay transparency laws, more people are discussing their compensation with teammates. It’s a safe bet that many will ask their managers for pay adjustments to correct differences they do not understand or accept.

Leaders must be prepared to discuss compensation with their employees openly.

Here's where to begin.

Educate yourself.?Many leaders need to become more familiar with compensation practices in their organization and are, therefore, unprepared to address questions regarding pay. Ignorance is no longer bliss. Leaders should schedule an appointment with HR to better understand the organization's compensation philosophy and pay structure.

Familiarize yourself with the state laws where you operate.?State (and city) pay laws vary. For example,?in California,?employers with 15 or more workers must list salary ranges on job postings on a company's hiring page or third-party websites like?Indeed.com, LinkedIn, or other job boards. Businesses must also provide the pay scale to an employee for the job they currently hold upon request.?

Rhode Island doesn't require employers to post pay ranges on job ads. However, businesses must provide the range to job applicants upon request.

Employers must disclose the minimum and maximum range on offer before discussing compensation with the candidate, when they officially make the hire, and if the employee moves into a new position. Plus, they'll have to provide a salary range for a current employee's role at their request.

Prepare a response to commonly asked questions.?No doubt they'll be questions that you're frequently asked, which is why it's best to have an answer ready.

Questions like:

· Why am I paid less than the new hire?

· Why is my co-worker making more than me?

· What's my position's salary range, and how was this determined?

· What happens if I hit the top of this range?

· How frequently are salary ranges adjusted?

· How does our company ensure our pay keeps up with the market?

· How do I make more money?

· What's the salary range for the position above me?

· Who can I speak with if I'm unhappy with my pay?

Set the stage for a successful conversation. Where you discuss a highly sensitive matter like pay will have some bearing on how the other person reacts and could directly impact the outcome you hope to achieve. If you work in an open office environment, then it's best to book a conference room. If you're planning on discussing pay with a remote employee, ask them to log onto the call from a place where they'll have some privacy.

Don't be afraid to admit you don't know.?Pay transparency laws are new for everyone, plus the landscape is changing daily. If an employee asks a question you cannot answer, don't be afraid to say something like, "That's a great question. I don't have an answer. Let me investigate this and get back to you by Friday at noon."

The more you understand about compensation practices, the easier it will be to navigate the new world of pay transparency. And you may even learn a thing or two along the way.

Want to get better at handling difficult conversations? Download a copy of my latest book,?Can We Talk? Seven Principles for Managing Difficult Conversations at Work.