Wage transparency, salary compensation, and compensation transparency generally, involves disclosure of employee compensation amounts, either among other employees in an organization, to owners, to government regulators, or to the public.
Some jurisdictions have pay transparency laws intended to prevent discrimination based on demographics like gender or race. These laws require job listings to give a salary range for the position. To eliminate unintentional discrimination and treat employees more ethically, some organizations have adopted radical transparency, disclosing all employees' compensation internally and either equalizing pay for similar positions or justifying differences.
Some jurisdictions mandate disclosure of executive compensation to shareholders, in an attempt to reduce excessive compensation.
According to a 2024 review of existing evidence, pay transparency within a firm tends to narrow coworker wage gaps, but also incentivizes employers to bargain more aggressively to keep average wages down. Within-firm pay transparency also reveals to workers pay differences across different levels of seniority, which "can lead to more accurate and more optimistic beliefs about earnings potential, increasing employee motivation and productivity." Cross-firm pay transparency overall strengthens the power of workers against employers, as workers are more likely to seek higher-paying jobs, and negotiate higher pay at their current job. [1]
A 2024 experiment conducted on employees at an Asian bank showed that revealing salaries of their managers, especially to those who predicted it lower than actual, led the employees to become more productive. [2] [ non-primary source needed ]
Under Ontario's Employment Standards Act it is illegal for an employer to "intimidate, dismiss or otherwise penalize an employee or threaten to do so" because the worker has disclosed their own wages or because the worker has inquired about the wages of another worker for the purposes of determining the employer's compliance with the law's Equal Pay for Equal Work provisions. [3]
In the United Kingdom, the Equality Act 2010 protects the rights of workers to discuss pay and forbids employers from prohibiting a worker's "relevant pay disclosure". [4]
In the United States, the National Labor Relations Act protects the right of employees to discuss compensation without retaliation from their employer. [5]
California, Connecticut, Hawaii, Illinois, Maryland, New York, Nevada, Rhode Island, and Washington have passed compensation transparency laws as of 2023. Some US cities also have compensation transparency laws, including New York City. [6]
New York enacted a pay transparency law in 2023. The law requires employers to publicly disclose job salary ranges. [6] Massachusetts enacted a pay transparency law in July, 2024, which applies to businesses with more than 24 employees, with data reporting for businesses with 100 or more employees. [7]
Maryland's Equal Pay for Equal Work law states that "an employer may not prohibit an employee from inquiring about, discussing, or disclosing the wages of an employee or another employee". [8]
Employment is a relationship between two parties regulating the provision of paid labour services. Usually based on a contract, one party, the employer, which might be a corporation, a not-for-profit organization, a co-operative, or any other entity, pays the other, the employee, in return for carrying out assigned work. Employees work in return for wages, which can be paid on the basis of an hourly rate, by piecework or an annual salary, depending on the type of work an employee does, the prevailing conditions of the sector and the bargaining power between the parties. Employees in some sectors may receive gratuities, bonus payments or stock options. In some types of employment, employees may receive benefits in addition to payment. Benefits may include health insurance, housing, and disability insurance. Employment is typically governed by employment laws, organisation or legal contracts.
Payroll taxes are taxes imposed on employers or employees, and are usually calculated as a percentage of the salaries that employers pay their employees. By law, some payroll taxes are the responsibility of the employee and others fall on the employer, but almost all economists agree that the true economic incidence of a payroll tax is unaffected by this distinction, and falls largely or entirely on workers in the form of lower wages. Because payroll taxes fall exclusively on wages and not on returns to financial or physical investments, payroll taxes may contribute to underinvestment in human capital, such as higher education.
A salary is a form of periodic payment from an employer to an employee, which may be specified in an employment contract. It is contrasted with piece wages, where each job, hour or other unit is paid separately, rather than on a periodic basis. Salary can also be considered as the cost of hiring and keeping human resources for corporate operations, and is hence referred to as personnel expense or salary expense. In accounting, salaries are recorded in payroll accounts.
The Equal Pay Act of 1963 is a United States labor law amending the Fair Labor Standards Act, aimed at abolishing wage disparity based on sex. It was signed into law on June 10, 1963, by John F. Kennedy as part of his New Frontier Program. In passing the bill, Congress stated that sex discrimination:
An employment contract or contract of employment is a kind of contract used in labour law to attribute rights and responsibilities between parties to a bargain. The contract is between an "employee" and an "employer". It has arisen out of the old master-servant law, used before the 20th century. Employment contracts relies on the concept of authority, in which the employee agrees to accept the authority of the employer and in exchange, the employer agrees to pay the employee a stated wage.
Equal pay for equal work is the concept of labour rights that individuals in the same workplace be given equal pay. It is most commonly used in the context of sexual discrimination, in relation to the gender pay gap. Equal pay relates to the full range of payments and benefits, including basic pay, non-salary payments, bonuses and allowances. Some countries have moved faster than others in addressing equal pay.
Piece work or piecework is any type of employment in which a worker is paid a fixed piece rate for each unit produced or action performed, regardless of time.
In contract law, a non-compete clause, restrictive covenant, or covenant not to compete (CNC), is a clause under which one party agrees not to enter into or start a similar profession or trade in competition against another party. In the labor market, these agreements prevent workers from freely moving across employers, and weaken the bargaining leverage of workers.
A severance package is pay and benefits that employees may be entitled to receive when they leave employment at a company unwilfully. In addition to their remaining regular pay, it may include some of the following:
The New Zealand Employment Relations Act 2000 is a statute of the Parliament of New Zealand. It was substantially amended by the Employment Relations Amendment Act 2001 and by the ERAA 2004.
The Fair Labor Standards Act of 1938 29 U.S.C. § 203 (FLSA) is a United States labor law that creates the right to a minimum wage, and "time-and-a-half" overtime pay when people work over forty hours a week. It also prohibits employment of minors in "oppressive child labor". It applies to employees engaged in interstate commerce or employed by an enterprise engaged in commerce or in the production of goods for commerce, unless the employer can claim an exemption from coverage. The Act was enacted by the 75th Congress and signed into law by President Franklin D. Roosevelt in 1938.
The California Labor Code, more formally known as "the Labor Code", is a collection of civil law statutes for the State of California. The code is made up of statutes which govern the general obligations and rights of persons within the jurisdiction of the State of California. The stated goal of the Department of Industrial Relations is to promote and develop the welfare of the wage earners of California, to improve their working conditions and to advance their opportunities for profitable employment."
Indian labour law refers to law regulating labour in India. Traditionally, the Indian government at the federal and state levels has sought to ensure a high degree of protection for workers, but in practice, this differs due to the form of government and because labour is a subject in the concurrent list of the Indian Constitution. The Minimum Wages Act 1948 requires companies to pay the minimum wage set by the government alongside limiting working weeks to 40 hours. Overtime is strongly discouraged with the premium on overtime being 100% of the total wage. The Payment of Wages Act 1936 mandates the payment of wages on time on the last working day of every month via bank transfer or postal service. The Factories Act 1948 and the Shops and Establishment Act 1960 mandate 15 working days of fully paid vacation leave and 7 casual leaves each year to each employee, with an additional 7 fully paid sick days. The Maternity Benefit (Amendment) Act, 2017 gives female employees of every company the right to take 6 months' worth of fully paid maternity leave. It also provides for 6 weeks worth of paid leaves in case of miscarriage or medical termination of pregnancy. The Employees' Provident Fund Organisation and the Employees' State Insurance, governed by statutory acts provide workers with necessary social security for retirement benefits and medical and unemployment benefits respectively. Workers entitled to be covered under the Employees' State Insurance are also entitled to 90 days worth of paid medical leaves. A contract of employment can always provide for more rights than the statutory minimum set rights. The Indian parliament passed four labour codes in the 2019 and 2020 sessions. These four codes will consolidate 44 existing labour laws. They are: The Industrial Relations Code 2020, The Code on Social Security 2020, The Occupational Safety, Health and Working Conditions Code, 2020 and The Code on Wages 2019. Despite having one of the longest working hours, India has one of the lowest workforce productivity levels in the world.
The Paycheck Fairness Act is a proposed United States labor law that would add procedural protections to the Equal Pay Act of 1963 and the Fair Labor Standards Act as part of an effort to address the gender pay gap in the United States. A Census Bureau report published in 2008 stated that women's median annual earnings were 77.5% of men's earnings. Recently this has narrowed, as by 2018, this was estimated to have decreased to women earning 80-85% of men's earnings. One study suggests that when the data is controlled for certain variables, the residual gap is around 5-7%; the same study concludes that the residual is because "hours of work in many occupations are worth more when given at particular moments and when the hours are more continuous. That is, in many occupations, earnings have a nonlinear relationship with respect to hours."
A thirteenth salary, or end-of-year bonus, is an extra payment sometimes given to employees at the end of December. Although the amount of the payment depends on several factors, it usually matches an employee's monthly salary and can be paid in one or more installments. The thirteenth salary is most prominent in Latin America, where this payment is mandatory in most countries. In countries where the bonus is required by law, all employees usually receive it if they have worked for the company for a certain required amount of time. However, freelancers and contract workers are often not entitled to the 13th-month pay. Employees who have not worked for the company for a year often receive a prorated amount.
The Labor policy in the Philippines is specified mainly by the country's Labor Code of the Philippines and through other labor laws. They cover 38 million Filipinos who belong to the labor force and to some extent, as well as overseas workers. They aim to address Filipino workers’ legal rights and their limitations with regard to the hiring process, working conditions, benefits, policymaking on labor within the company, activities, and relations with employees.
Wage theft is the failing to pay wages or provide employee benefits owed to an employee by contract or law. It can be conducted by employers in various ways, among them failing to pay overtime; violating minimum-wage laws; the misclassification of employees as independent contractors; illegal deductions in pay; forcing employees to work "off the clock"; not paying annual leave or holiday entitlements; or simply not paying an employee at all.
The Wage Earner Protection Program Act, is an act of the Parliament of Canada. It was part of a package of reforms to the insolvency law of Canada that were brought into force in 2008 and 2009 to compensate employees of companies made bankrupt or placed into receivership under the Bankruptcy and Insolvency Act. It was subsequently expanded in 2011 to cover employees who lose their jobs when their employer's attempt at restructuring subsequently ends in bankruptcy or receivership.
Authored by State Senator Hannah-Beth Jackson, the California Fair Pay Act is an amendment to the existing California labor laws that protects employees who want to discuss about their co-workers' wages as well as eliminating loopholes that allowed employers to justify inequalities in pay distribution between opposite sexes. The bill is an extension of the California Equal Pay Act of 1949, which was originally intended to enforce equal pay.
Prior salary information is one of the factors involved in the implementation of the Equal Pay Act and prior salary legislation in the United States.