The new salary transparency bill in California is a big win for job seekers and follows in the footsteps of Colorado and New York City. As with any new law, it's interesting to look at the discrepancy between the desired intended purpose and the reality on the field. I figured I’d scribble down some of my thoughts having been quite close to compensation practices in the tech industry.
About the bill
As of January 1st this year, employers in California with more than 15 employees are required to include pay ranges for all job postings. If the employer lists their posting to a third party job board, they must provide the pay range to the third party to display. Employees are also able to ask for more information about compensation specific to their role.
For employees in California, these changes are immediately actionable. Simply look up your job role on your company’s career page (if there's an opening), and check to see if your salary falls within range of the posting. If it’s below the range, you can set up a fun conversation with your manager to have your salary topped up. Our coaches can even help you with this conversation.
Are the ranges accurate?
Yes and no. The requirement for this bill is limited to just the cash salary or hourly wage. Despite that, this bill will be quite helpful for job seekers, and the good faith ranges will be as accurate as the company choosing to post it decides to be (we’re working on integrating these ranges into our job board at Levels.fyi). But for tech employees, most of us already know that base salary (cash salary) is only just part of the picture. Stock compensation, bonuses, and commission based structures are effectively omitted. This makes sites like Levels.fyi useful to consult in addition to looking at the employer's own ranges.
Wide compensation ranges
Tech companies: We publish salary ranges on every job post to help job seekers and stay in compliance.
— Chris Bakke (@ChrisJBakke) January 6, 2023
The salary ranges on every post: pic.twitter.com/LXT97BYEre
Netflix listed this compensation range for most of their job postings.
Netflix got a lot of heat for posting this obnoxiously wide compensation band, which goes entirely against the spirit of the law. While this is a particularly egregious example, I do think compensation ranges can end up being quite wide especially when considering total compensation, which Netflix also clarifies is the case here. There aren't salaries as low as $90k posted on Levels.fyi, but Netflix’s L6 engineers can actually reach up to $900,000 in compensation, so it’s not out of the picture for the max band. Of course, it’s no excuse for any companies that are intentionally skirting the law. But since there isn’t really a sense of how judicious enforcement of the law will be yet, companies are testing the waters to see when there really might be any reprisal.
My theory for why Netflix listed such a wide range is because of their all cash compensation philosophy, letting employees opt for all cash in place of stock. Since they offer that option, their range would have to be much wider to account for the potential cash compensation an employee may choose to receive. And the starting range could technically be much lower (though I doubt it'd be as low as $90k) if the employee doesn't select that option. And on top of that, Netflix compensates at the personal top of market for an individual's skills which could introduce quite some variability in pay depending on the specialization (iOS vs ML vs DevOps etc). They state this on their job postings directly: "At Netflix, we carefully consider a wide range of compensation factors to determine your personal top of market. We rely on market indicators to determine compensation and consider your specific job, skills, and experience to get it right. These considerations can cause your compensation to vary and will also be dependent on your location."
After chatting with a few recruiters in the industry, we discovered another reason for wide salary ranges. We found out that many job listings span across multiple levels. For example, a “Senior Software Engineer” job posting might actually span across Senior (~L5), Staff (~L6), and Senior Staff (~L7) roles, for which your actual level would be determined by your application or interviews. Apparently, this is a vestige of how job postings have traditionally been consolidated. Understandably, salary ranges could actually be quite wide for such a posting since it would encapsulate roles from L5-L7.
Other edge cases
Many startups currently allow for employees to choose their own mix between cash and equity. Candidates are given an option between a low base / high equity offer and a high base / low equity offer, and they can choose something on a linear scale in between. Companies such as The Browser Company do this today. We’ve even done it here at Levels.fyi. What I’m curious about is how you’d treat your listed range on a job posting without being seemingly disingenuous especially if that range can also further differ based on the experience, level, or interview performance of the candidate.
By listing the range, companies have also been concerned about inflated candidate expectations. For example, just because a range may be from $120k - $160k doesn't mean that every candidate who gets the job will actually get $160k. There may be a number of parameters that determine where in the range you fall, but candidates who are now exposed to the range simply ask for the highest amount. In some cases, companies have reported lower offer acceptance rates due to this. As such, I suspect that some companies will consider revealing a lower range than what they are actually willing to offer. Instead of showing the low range to the high range, they might show the low range to the midpoint. And based on their qualifications, the candidate can end up getting a higher offer than the listed range. Supposedly, noone will complain about getting a higher offer than usual. And after all, "out-of-band" compensation packages are already quite commonplace within the tech industry even if they require special approval.
It's still only the first week of the law being in effect in both California and Washington, so it's still quite early to say how everything will shake out. But it'll certainly be interesting to see how companies adapt over time. Will they find other ways around it? Or will they embrace it as a competitive advantage to be as transparent as possible? In the meantime, we'll continue collecting offers on Levels.fyi to provide the most granular view of these compensation packages as possible.
If you're currently looking for a job, we also help candidates with resume review, interview preparation, and negotiation support, with a guaranteed offer increase or your money back. We'd be happy to answer any questions about any of our services if you email us at services@levels.fyi.