Society

Pay Transparency Is on the Rise—Here’s How to Make It Work for You

Become an open book.

by : Truc Nguyen- May 2nd, 2023

Paramount Pictures (Clueless)

Ellen Eamon, a manager in the hospitality industry and founding member of the Montreal Restaurant Workers Relief Fund, looked at around 2,000 pay stubs through her work with the COVID-19 mutual-aid program. “The thing that was so shocking to me was the wild variation in the way that people were paid and how much they were paid,” she says. Workers in the same job received completely different wages, and the way tips were calculated varied by restaurant as well. “A sous-chef position, for example, would pay $85,000 a year in one restaurant and $17 an hour in another.”

Hospitality roles are often posted without a salary range or any other compensation information, leaving job seekers in the dark about how much they can expect to make—and how much their peers might be making. “I think it’s people trying to hide the fact that they underpay or they don’t pay overtime or they take a cut of tips or they’re just making things up as they go,” says Eamon.

But things are starting to change. In recent years, more restaurants in Montreal have started including salary ranges and information about tips and overtime in their job postings, a shift that Eamon is glad to see after her experiences as a hiring manager. “I think it’s so important to be super transparent and super upfront about what the expectations for a position are, what the salary is and what the benefits are,” she says. For her, being open about this information during the hiring process is a way to reduce potential gender and race wage gaps and provide more clarity for workers. “It stops so much conflict… [and] solves so many problems right away,” says Eamon.

Soon, this form of pay transparency—where salary ranges are included in job postings—may become the norm. According to a recent Talent.com survey, 84 percent of Canadians would support a law requiring employers to disclose salary ranges in job postings. In the United States, job listings in California, Washington state, Colorado and New York City now have to include salary ranges. And since last June, employers in Prince Edward Island have been required to include pay information in public job postings and can no longer ask applicants about their pay history or penalize employees for sharing their salary with co-workers. Similar legislation is being considered in British Columbia and Newfoundland and Labrador, and in 2018, the Pay Transparency Act was passed in Ontario but subsequently shelved.

“Pay transparency is going to be a thing whether we like it or not—gen Z shares everything, including how much they make,” says Allison Venditti, a career coach, HR expert and founder of Moms at Work. “Nobody posts a job posting if they don’t have a budget.” And job seekers are tired of applying and interviewing for roles and then finding out that the salary is too low. “[It’s] a huge waste of time for everybody.” With the pandemic, “a lot of things have been thrown at women, and I think we’re just tired of it,” adds Venditti, who has also worked as a recruiter and headhunter. “I think that there’s a huge movement for pay transparency from women, who are just tired of being underpaid.” When Venditti worked in HR, she would see women apply for roles without pay bands, get asked how much they were currently making and then be offered only a nominal amount above that number. “I was looking down the pipeline and watching women being underpaid by 30 to 40 percent [compared] to their co-workers, and no one seemed to care that that was a thing,” she recalls.

Venditti advises job seekers to ask about pay right upfront, before they apply for a position, by saying something like “I’m very interested in this job posting; can you please let me know what the salary range is?” Waiting too long—for example, until after multiple interviews—to ask this question can mean frustration and wasted effort if there’s a mismatch between expectations and the actual rate.

Of course, wage transparency extends beyond simply requiring employers to include a salary band in job ads. “Prohibiting pay secrecy is one aspect,” says Sylvia Fuller, a professor of sociology at the University of British Columbia whose research focuses on labour-market inequality. “Another element of wage transparency is making that data on companies and their wage gaps publicly visible and available—for not only their own employees and unions and so forth but also the general public.” That could mean reporting aggregate wage data or, in some cases, publishing individual names and salaries.

In Canada, the Pay Equity Act, which came into effect in 2021, requires federally regulated workplaces with 10 or more employees to establish a pay-equity plan, address any gender pay gaps and report aggregated wage-gap information. “When you publish people’s salaries and they can actually see what they’re making [compared to] what their equivalent peers are making, for example, you do see the gender wage gap shrink,” says Fuller. This is relevant when you consider that in Canada, female employees aged 25 to 54 still earn 11.1 percent less per hour than male employees, and there are also significant racial wage gaps.

If you are already in a role and suspect or discover that you’re being underpaid, Venditti suggests talking to HR and even looking into the pay-equity legislation in your province or territory. “I’ve had hundreds of women tell me about experiences where they found out that they were underpaid by $30,000 or $50,000 [compared to] co-workers who were hired after them [or] who were more junior than them,” she says.

Pay transparency doesn’t mean that everyone has to be paid the same; for example, there can be experience- or performance-based reasons why one worker might be paid more than another. But employers should have reasoning behind what they’re paying people, says Venditti. “Really, the goal of transparency is trust.”

Importantly, the shift toward transparency also offers an opportunity for broad, meaningful change. For example, one study of faculty salaries found that wage-transparency laws reduced the gender wage gap at Canadian universities by about 30 percent. “It is an important tool at the individual level for workers or job seekers, but it’s also a really important part of the bigger picture [and moving] toward having more equitable and inclusive working environments for everybody,” says Fuller. “Just showing the problem doesn’t fix the problem, but if you don’t know what it is and can’t track it over time—if you don’t have those metrics—then you really are in the dark.”