How Transparency Protects Your Paycheck | The Bell Policy Center

How Transparency Protects Your Paycheck

Date: Sep 7, 2017

With Labor Day in our rearview mirror, now is the perfect time to look back on what Colorado has done to help increase wage transparency and compensation for Coloradans. This year, two bipartisan pay transparency changes were made to Colorado law, empowering workers to challenge wage inequities and illegal employer practices and keeping Colorado on a trajectory of improving persistent gender-based pay problems in our state. 

While pay transparency policy changes matter for all workers, research shows they can be especially impactful for women. The Women’s Bureau at the U.S. Department of Labor states pay secrecy policies “serve to perpetuate” earning disparities. The Institute for Women’s Policy Research finds they “appear to contribute to the gender gap in earnings.”  

In early August, the 2017 Colorado Pay Transparency Act took effect, protecting all Colorado employees from discriminatory or unfair employment practices if they discuss their wages and salaries with each other. This law strengthens 2008 pay transparency protections already implemented in our state – protections that have contributed to both pay increases for women and a narrowing wage gap, in particular for college-educated women.  

When it comes to wage theft, the “illegal practice of not paying workers for all of their work including; violating minimum wage laws, not paying overtime, and forcing workers to work off the clock,” women are yet again at more of a disadvantage. Analysis from the Economic Policy Institute finds women are more impacted than men for at least two reasons. They experience a majority of minimum wage violations and they are paid less than men to begin with (Colorado women earn 81 percent of what men do in our state). This means women “are left even worse off after their wages are stolen." 

Data from the Colorado Department of Labor and Employment shows instances of wage theft violations have increased over the past two years. In fact, CDLE found 274 wage theft claims with merit in 2016. When the 2017 Wage Theft Transparency Act took effect this past spring, it made most of these violations a matter of public record. Now, Coloradans can benefit from transparency by accessing information about the employers who cheat their workers. 

David Burkus, a professor, author, and contributor to the Harvard Business Review, articulates why transparency in wage and salary policies matters: "Secrecy is the easiest way to deal with the uncomfortable feeling of inequality.” His review of the research, some of which has been cited by the Bell, shows how transparency policies can have a positive impact on both the workplace and workforce.  

Some employers are catching on, too. Analysis conducted by Payscale, a data-driven compensation resource for employers and employees, shows increased pay transparency is increasingly a best practice in compensation policy – so much so that nearly half of all organizations aim for transparent pay policies in 2017. However, Payscale’s research also shows only one-third of employers report having a transparent pay process. Another important factor to consider: how employers view transparency policies and how employees actually experience them. With a gap between the two, state-directed policies remain hugely important for prompting employers to move from aspiration to action.

That's why this year's policy changes are a step in the right direction for Colorado, but we can still do more to take the lead on issues of pay transparency. As we build our Opportunity Report, we'll be searching for other ways Colorado and its employers can drive greater pay equity and serve as a model for other states.