July 14, 2024


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What the Newest Pay-Transparency Laws Mean for Restaurants

What the Newest Pay-Transparency Laws Mean for Restaurants

Pay transparency will effect restaurants

The movement for pay transparency is picking up steam. Starting in January 2023, Rhode Island, California and Washington will join the growing list of states with pay transparency laws. These laws range from requiring salary ranges in job advertisements to mandating that companies share current pay ranges with any employee who requests them.

Restaurants are already grappling with last year’s tipped work laws, hiring difficulties, and unionization movements (you can find more information on tipped wages and unionization in some of our other posts). Now they are wondering, “What will these laws mean for my restaurant business?”

How you adopt these new requirements depends on your restaurant’s current pay structure and the overall company culture. But there are a few common things every restaurant operator will encounter as these laws go into effect:

Short-Term Discomfort

Even if you feel that all your managers have fair pay, expect difficult conversations ahead. Factors like tenure, restaurant volume, and self-perceived performance will create differences of opinion regarding what “fair” means. Have a plan for addressing any disputes and be prepared to share how you established the current pay structure.

Be Prepared to Negotiate

In the long run, dancing around salary negotiations will become less uncomfortable. However, the initial rollout of these laws will prompt many employees to broach the subject of pay with their supervisors. Since restaurants already operate on thin profit margins, they can’t necessarily afford to accommodate every employee’s request. Nevertheless, take each request seriously and have options ready to compromise. Can you add the employee to a bonus plan? Could you guarantee certain days of the week off? Work with the employee to come up with a solution together.

Early Adopters Will Benefit

If your state does not have pay transparency laws yet, take the opportunity to audit your pay structures. Make proper adjustments before your hand is forced. Not only does early adoption better position your restaurant to handle future legislation, but it also gives your restaurant a competitive advantage in recruiting. Showing your commitment to fair compensation goes a long way in maintaining a strong employer brand.

Benchmarks Will Need to be Clear

Transparency in existing salaries must come with concrete benchmarks for future compensation and career paths. Have crystal clear performance metrics on which any raises and promotions are based, especially if you operate different concepts of varying volume, service level, and location. If not, any inconsistencies will send ripples through your staff. Not only will benchmarks head off any grumblings about existing pay disparities, but they will also provide concrete motivation for future performance.

Recruitment Processes Will Shift (in a good way)

Having a transparent pay structure takes the uncertainties out of screening candidates. Hiring managers who embrace being upfront about pay will find that less of their own time is wasted when candidates know their compensation options upfront. With fewer surprises at the final offer stages, there will be a higher likelihood that a candidate will accept a position at your restaurant.

Our Restaurant Recruiters Can Help

Every state has its own nuanced laws surrounding pay transparency, and they all continue changing. No matter what state your business operates, it might be time to start proactively disclosing pay ranges. If you are unsure of the best way to do that, our Restaurant Recruiters can help. Recruiting the top restaurant management talent with complete transparency has been our standard for almost twenty-five years. Contact us to learn about our process!