The wage and salary record transparency rules aim to close the gender pay gap

When I interviewed a woman for a job at OrCam Technologies in New York City last year, the company official inquired about her salary history. The company then rejected her. But the story did not end there.

OrCam, which makes reading-assistive technology for the visually impaired, violated a two-year-old city labor law that bars employers from inquiring about an applicant's previous salary or using payroll history as a 'factor' in calculating offers they make, according to the New York City Commission on Human Rights.

OrCam, which also has offices in Jerusalem, London and Cologne, agreed to the settlement, paying the rejected job candidate, who reported the company to the commission, $5,000 in psychological damages and $10,000 in civil penalties. It also agreed to retrain employees on the payroll ban which aims to break the cycle of unfair pay for women and people of color and to take other steps to reduce the potential for abuse.

At least 18 pay transparency policies are in place in 32 countries, including 71 percent of OECD members, Zoe Cullen, a professor at Harvard Business School, said.

Since November, New York City law in this area has become stricter. If any company with more than four employees wants to hire employees, it must now not only refrain from inquiring about applicants' previous salary but also share 'good faith' ranges of expected salary in its job advertisements.

As well as in the UK and the world, these two rules are part of a wide range of initiatives, mostly focused on pay transparency, that are gaining acceptance in cities and states across the US.

According to the International Labor Organization, women globally earn 20 percent less than men, and US Census data shows a similar disparity among American employees. Their goal is to narrow this well-documented gender pay gap.

According to HR Drive, 21 municipalities and 21 states in the United States have issued payroll bans. And Zoe Cullen, a professor at Harvard Business School, says that there are at least 18 pay transparency policies in place in 32 countries, including 71 percent of OECD members.

It is recommended that you see a doctor.

Cullen says that the most common policy implemented in 14 countries, including the UK, requires employers to report internal pay gaps based on gender. Others only go so far as to prevent organizations from penalizing workers who share their salary information.

Multiple studies have found that policies designed to close gender pay gaps have been effective. In Denmark, for example, legislation was adopted in 2006 that required employers with more than 35 employees to provide annual wage data by gender. The researchers found that the pay gap closed by about two percentage points in companies covered by the law compared to companies that were exempt from the law.

After the first statewide ban on payroll in the United States was enacted in California in 2018, the amount women earn compared to men increased by about 1 percentage point, according to a study published by the National Bureau of Economic Research. The study found that older women and mothers of children over the age of five gained the most from the ban. The co-authors predicted that the ban 'could close the gender income gap by more than 20 percent for those who change jobs.'

It is recommended that you see a doctor.

However, these policies are still being developed around the world and have been inconsistently enforced. Stephanie Bornstein, a law professor at the University of Florida, says, "We're kind of in an experimentation period to try different things."

Although the US has not yet followed UK jurisdictions in imposing payroll bans, its requirement that companies with more than 250 employees publish measures of the pay gap far exceeds the UK government's bumbling efforts to collect data.

The Trump administration initially delayed implementing an Obama-era regulation that would have required comprehensive data collection. However, after a court order was issued, the administration was forced to back down and data collection for 2017 and 2018 commenced accordingly. However, the initiative has since been discontinued and has not yet been restarted.

"When women, especially mothers, stop making low wages, the economic outlook for all people will improve," said Stephanie Bornstein of the University of Florida.

Some employer advocates argue that cultural shifts plus market forces will be more effective than government action in closing wage gaps. 'It's really going to be organizations that look inward and do something to make sure they promote people fairly,' says Dennis Visconti, an attorney with Littler, who defends employers against employment discrimination lawsuits.

"Cullen says," There also remain concerns about unintended consequences of wage transparency decisions including the potential for lower wage growth in the long term. Employers have responded to the requirements by 'bargaining aggressively, lowering average wages,' though union collective bargaining counteracts this pressure.

It is recommended that you see a doctor.

According to Peter Bamberger, professor at Tel Aviv University's Kohler School of Management and author of a new book on pay transparency, Expose pay, pay transparency laws only address salaries and fail to account for other forms of reward such as bonuses. While regulations flatten salaries among the workforce, they also often increase differences in other benefits, and American women have historically been shortchanged in this area, says Bamberger.

Bornstein argues that concerns about low-wage workers, particularly mothers, are misguided and fail to consider the positive effects of increased wages on the economy as a whole. She posits that when women earn higher wages, the economic prospects of all people will improve.

A study by Cullen and a colleague found that less than a third of large bank employees accurately predicted the average salaries of their colleagues in the same job and location, even when they were given a salary for a correct answer.