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How to Use OpenComp to Comply with Pay Legislation & Share Pay Ranges

, | Dec 8, 2022 6:00:00 AM | By

Across the U.S., a movement towards mandatory pay transparency is gaining momentum. An ever growing number of states and localities have either active or pending pay legislation, which requires the disclosure of pay ranges, pay data reporting, or potentially, both. 

Pay legislation has officially passed in Colorado, New York City, Washington, and California, but your business doesn’t necessarily have to be based in one of these locations to be impacted by the law. No matter where your HQ is, it’s a smart move to prepare yourself for pay transparency today. 

How can pay legislation impact your business?

The financial impact of the new regulations can be severe, and the cost of violating new pay legislation far exceeds the cost of getting your business compliant. In NYC, businesses could face up to $250,000 in fines for each infraction. 

But at the end of the day, this is more than a legal issue. 62% of US employers are already planning or considering revealing pay information, even if not required. And that’s likely because 68% of employees have stated they would switch to a more transparent employer, even for the same pay.

Businesses that comply with pay transparency laws won’t just avoid fines and penalties, they’ll also attract and hire top talent. 

Why has facilitating pay transparency been so difficult?

Despite these benefits, facilitating pay transparency is easier said than done. Traditional methods of gathering comp data from market surveys often delivers comp data that’s stale by up to a year, which leads to inaccurate benchmarking. And that comp data may also contain gaps in information. Even if you do have good comp data, constructing pay ranges (a critical component of pay equity) is time consuming and often expensive. Generally you’ll need to engage an outside vendor or hire a specialist in-house to construct and manage your ranges. And with either choice, it could take months before you have your first ranges set up.

And finally, ensuring that your entire organization can even access and use your pay ranges once they’re set up is difficult and error prone. When pay ranges live on spreadsheets it’s extremely easy for recruiters, hiring managers, and HR professionals to lose track of the most up-to-date policies.

OpenComp can help your business get over the hurdles of traditional pay range creation and facilitate pay transparency with several different solutions. Read on for a simple three step process to pay transparency that OpenComp’s Senior Product Manager Mandy Kubicek and Product Marketing Manager Owen Bitas outlined during a recent product webinar. 


Step 1: Use Market Pulse to access the most accurate comp data for your organization.

The first step to comply with pay legislation in OpenComp is to benchmark your organization with Market Pulse. Benchmarking is the process of mapping your company’s roles to a set of standard roles used by companies of your size and industry. This enables you to compare “apples to apples” to determine how competitively you’re paying.
To unify our best-in-class comp data with your internal company information, OpenComp supports 20+ Human Resource Information System (HRIS) and Equity provider integrations. Once connected, your HRIS and Equity integrations feed information back into OpenComp in near real-time, updating both your employee data and the insights gleaned from it, without any manual work required.
Once you’ve completed this sync, you’ll have access to a comprehensive dashboard showcasing how your employees are paid relative to the market at the company, department, and individual level. 
At this point, you may be asking if you can use raw market percentiles to create pay bands. Though it may be tempting, it’s not wise to do so. This is because market data is not evenly distributed. For example, if you use raw market data and choose the 25th percentile as your minimum and the 75th percentile as the maximum, depending on how similarly your peers are paying for that role, the spread between the 50th percentile and the 75th could be much larger than the spread between the 50th percentile and the 25th. As a result, if you do use that spread as a pay band, your midpoint won’t remain at the 50th percentile. 
Thus, using only market data leaves you exposed to a higher risk of budget overruns, unnecessary dilution, pay inequities, attrition, and lower candidate acceptance rates – all of which have material impacts. Companies that want to both comply with pay legislation and optimize their comp spend will take the time to construct pay ranges that are:

  1. Market-based and adjusted for comp data outliers and abnormalities. 
  2. Calculated consistently across your business.
  3. Represent deliberate choices as to how your company wants to use compensation  strategically. 


Step 2: Build customized pay ranges in three steps with OpenComp Range Builder.

Once you’ve benchmarked your employees, you’re ready to build customized pay ranges in just a few steps. We’ve distilled the historically complex and messy process of creating salary bands into three key decisions you’ll make for your organization:

1. Select your geographic pay strategy

Your geo-pay strategy determines the market data from which each employee’s range is built. Based on what you select, two employees with the same role and level living in different locations might have different ranges. This has historically been very difficult to manage, especially with the rise of remote work. OpenComp handles the heavy lifting for you with automatic updates and insights. Once you set the strategy once, the rest is taken care of. Simply choose from one of our templates that represent choices utilized by some of the fastest growing companies out there. Or,if you’d prefer to build a strategy tailored to your company’s unique needs, you also have the ability to create a completely custom strategy. 

2. Select your market positioning.

Market positioning determines the percentiles in the market data that you want to target as the midpoint for your salary and equity ranges.  These templates are based on popular strategies to optimize how you’ll incentivize employees while managing cash, equity, and runway, though you also have the ability to fully customize your positioning as well:

  • High Cash, Low Equity allows you to be highly competitive with cash compensation, while conserving equity. This strategy is often used by mature companies who may have a limited option pool, but plenty of cash on hand. 
  • Medium Cash, Medium Equity strikes a balance, targeting the 50th percentile for both cash and equity. 
  • Low Cash, High Equity incentivizes employees with ownership, while allowing you to conserve more cash and extend your runway. This strategy is often used by younger companies who need to balance growth with cash conservation.

3. Select your Range Width

How broad or narrow your ranges are impacts your much overlap there is between your job levels. Range Builder provides the following templates that reflect the strategies we see most often, though these are fully customizable: 

  • Narrow ranges are ideal for companies who want to promote quickly. Ensure that all employees of a given level have very similar compensation.
  • Wide ranges provide more flexibility to increase compensation without necessarily increasing an employee’s level.
  • Standard is a popular approach that balances the ability to allow merit increases without level increases while providing greater pay consistency than with a wide strategy. 

Once you’ve made your three choices, OpenComp Range Builder does months of work instantly, producing pay ranges for your entire organization and planned future hires. Your Ranges Analytics Dashboard provides insights into how your current compensation practices match your new pay range structure across cash and equity. You’ll also be able to see the minimum compensation of the next level up for each employee, so you’ll know when promoting an employee how much of a cash adjustment may be needed.

When needing to publish a pay range with a job posting, you can filter your dashboard by geo tier and see all of the compensation details by job level. Then you can simply copy and paste the values into your job posting. 


Step 3: Equip your entire company with data at the point of decision using OpenComp Intelligent Offers.

As you begin interviewing and creating offers for candidates, you want to make sure that your hiring team knows how to use pay ranges effectively without the mess of going back and forth over email. 

That’s where OpenComp’s Intelligent Offers can help. When a recruiter or hiring manager creates a new offer in OpenComp, they’ll see only the most up-to-date pay range for the role they’ve selected, along with predictive insights that inform your team of the likelihood that candidates will say “yes” to your offer. 

Intelligent Offers guarantees that your compensation program is followed to a tee, thanks to direct integrations with OpenComp range Builder and Market Pulse. Whether you create customized pay ranges for your company or benchmark compensation to industry-leading market data, the policies that you create will be surfaced at the point of every decision in the offer process.

Because of these end-to-end integrations, you can ensure that your posted pay ranges are truly in “good faith” when recruiters and hiring managers speak to candidates. 


Get started today and avoid negative impact from new pay transparency laws!

With OpenComp, you have all the tools you need to create the foundation to comply with emerging pay legislation. In just minutes, you can turn pay transparency into a strategic advantage by developing your foundation, socializing your planning, and instilling a culture of pay transparency that will give you an edge in hiring, retention, and performance. 

Plus, OpenComp customers see a serious impact on their entire business. Using our solution, customers enjoy an 87% retention rate, an 83% offer acceptance (17% above industry average), gender pay gaps that are reduced by 75%, and funding raises that are 34% higher than their peers. 

See how OpenComp can help you avoid being impacted by new pay transparency  legislation with a live demo.


Lexie Sirak is a Senior Campaigns Coordinator at OpenComp and previously worked at JPMorgan Chase & Co. Connect with her on LinkedIn here.