Salary Transparency Laws: What You Need to Know

In recent years, pay equity has become an important workplace concern, resulting in increased action from lawmakers and employers to address the issue. In particular, salary transparency laws focused on pay transparency have been on the rise, with over a dozen state and local jurisdictions passing such laws in the last few years. 

As an employer or government contractor, it is important to understand salary transparency laws and best practices to promote fairness and equity within your organization. 

What is Pay Transparency?

Pay transparency refers to the practice of openly sharing information about employee compensation, including salary ranges, pay scales, and the factors that influence pay decisions. 

It aims to increase transparency and reduce pay disparities based on factors such as gender, race, or other protected characteristics.

While salary transparency laws may vary depending on your jurisdiction, here are some general aspects and best practices to consider:

1. Legal Requirements: Familiarize yourself with applicable laws regarding pay transparency in your country or state. Some jurisdictions may have specific regulations regarding what information you can disclose and to whom.
2. Equal Pay Laws: Ensure compliance with equal pay laws, which prohibit pay discrimination based on protected characteristics such as gender, race, or ethnicity. These laws typically require equal pay for equal work or work of comparable value.
3. Pay Reporting Obligations: In some regions, employers may be required to report certain pay data to government agencies to identify potential pay gaps or disparities.
4. Confidentiality: Understand that while pay transparency encourages open discussion about compensation, employee privacy should be respected. Avoid disclosing individual employee salaries without their consent.
5. Job Descriptions and Salary Ranges: Clearly define job roles and responsibilities, and establish salary ranges or bands associated with each position. This provides employees with a general understanding of the compensation structure within the organization.
6. Objective Criteria: Establish clear and transparent criteria for determining compensation, such as years of experience, education, skills, or performance metrics. This helps ensure that pay decisions are based on consistent and unbiased factors.
7. Regular Pay Audits: Conduct periodic reviews of pay practices to identify and rectify any unjustified pay disparities. Analyze compensation data to identify potential gaps based on factors like gender, race, or other protected characteristics.
8. Training and Education: Provide training to managers and employees about pay equity, unconscious bias, and the importance of fair compensation practices. This can help create a culture of transparency and understanding.
9. Communication: Foster open lines of communication regarding compensation. Encourage employees to discuss their compensation openly and provide a mechanism for them to address any concerns or questions they may have.
10. Transparency Policies: Establish clear policies outlining the organization’s commitment to pay transparency, including the information that will be shared and the channels through which it will be communicated.

Remember, pay transparency is not just about disclosing individual salaries but also about promoting fairness, addressing pay gaps, and creating an inclusive work environment. It requires a thoughtful approach that balances transparency with privacy concerns and compliance with applicable salary transparency laws.

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We know your pain points – let us help you relieve them – schedule a consult.

How Accounting Plays a Role in Strategic Planning

As the business world changes, so too must the accountant’s role. Accounting plays a crucial role in strategic planning as it helps organizations make informed decisions based on financial data and insights. Here are a few ways accounting contributes to strategic planning:

Budgeting and Forecasting: Accounting provides historical financial data that can be used to create budgets and forecasts for the future. This helps organizations to plan and allocate resources effectively and make informed decisions about future investments.

Cost Analysis: Accounting provides insights into the costs associated with different business activities. By analyzing the costs, organizations can identify opportunities to reduce expenses and increase profitability.

Financial Reporting: Accounting generates financial statements that provide a comprehensive view of the organization’s financial performance. These reports help stakeholders, including management, investors, and creditors, make informed decisions about the organization’s future.

Performance Metrics: Accounting helps organizations track and measure key performance indicators (KPIs) that are critical to the success of the business. KPIs such as revenue, gross margin, and net income can be tracked and analyzed to determine whether the organization is meeting its strategic goals.

Risk Management: Accounting helps organizations identify and manage financial risks. By analyzing financial data, organizations can identify potential risks and develop strategies to mitigate them.

Overall, accounting plays a significant role in strategic planning by providing valuable financial data and insights that organizations can use to make informed decisions and achieve their strategic goals.

Are you a Government Contractor? Virtual CFO provides GovCon-centric strategic accounting for small businesses providing services in technology, architecture, engineering, aerospace, and project management industries. We know your pain points – let us help you relieve them – schedule a consult.

Are CPA’s Solely Tax Gurus?

Certified Public Accountants (CPA) are highly trained people, specializing in accounting. They took the time to earn a professional designation by meeting several requirements. The conditions they met include passing the CPA exam, their level of education and experience. These professional accountants are considered trusted business advisors and are well respected. Contrary to many thoughts, CPAs focus on more than just tax planning and preparation. But what exactly do CPAs do other than taxes?

What Do CPAs Do?

CPAs help business owners make informed decisions, ultimately helping them to achieve their business’ goals. Also, their level of experience and expertise allows them to provide guidance and advice. There are a few common areas of expertise that CPAs focus on. These areas include:

• Auditing and assurance services
• Tax preparation and consulting
• Consulting services
• Financial planning

The guidance and services a CPA provides can be advisory, specialty consulting, or relating to the daily operations of a business. Some examples of the day-to-day services include bookkeeping and payroll administration.

Advisory services can include assistance in recruiting future accounting staff, creating budgets, and forecasts/projections. Government contract consulting is an example of a specialty service. As a government contractor being DCAA compliant is imperative.

Benefits of Working with a CPA

As a business owner, it is very easy to get caught up in the daily. You become so focused on this, that you often push aside the financial health of your business. Working with a CPA can help you with this. They provide many benefits for a business. These benefits include:

• Giving you more time to focus on running your business.
• Being compliant with applicable laws (Tax, FAR, DCAA)
• Receiving personalized business advice.
• They can help with business growth and development.

CPAs are highly educated and experienced accounting professionals. Often, they are associated with tax planning and preparation. However, their skill set is far greater than just taxes. They possess the knowledge to provide reactive guidance when errors occur. While simultaneously using foresight to encourage growth and guidance.

Originally written by Maryney Ramirez

Updated and additional content provided by Elizabeth Partlow

Are Employee Gifts Taxable?

As a business owner, giving employees gifts and other fringe benefits is something that you are familiar with. Every year you may like to give holiday bonuses or give a gift to each employee on their birthday. This allows you an opportunity to show your appreciation for your employees and to help build a great company culture. However, your good intentions may backfire if you do not understand the tax implications of gift giving. Depending on the type of gift given, it may be taxable income to your employees. But how do you know if a gift is taxable income or not?

What are De Minimis Fringe Benefits?

Most employee gifts are taxable income, unless they are de minimis fringe benefits. These benefits have a minimal value and occur infrequently. They also are not taxable and a business can deduct these items. A previous IRS ruling specifies that a de minimis benefit should not exceed $100. If the value and frequency cause accounting to be impractical, it is likely the gift it is a de minimis benefit. Examples of de minimis fringe benefits are:

• Holiday or birthday gifts with a low market value
• Occasional tickets to sporting events
• Flowers provided under special circumstances

These types of gifts and/or benefits are so small that there is no need to report them.

Taxable Employee Gifts

Cash and cash equivalents are some of the most convenient gifts to give your employees. Some examples of cash equivalent items are gift cards and gift certificates. You may want to think twice before giving these types of gifts though. These gifts are almost always taxable. For example, giving your employees a gift card to buy a turkey for Thanksgiving becomes taxable income for them. All taxable income is reportable on an employee’s W-2.

Planning ahead and having a good understanding of the tax implications for employee gifts is crucial. Keeping records of taxable employee gifts, you give makes W-2 processing easier. But what if you are unsure about what is or is not a taxable employee gift? The best thing to do is to ask your trusted CPA.

Originally written by Jamie M. Shryock, CPA

Updated and additional content provided by Elizabeth Partlow