Managing Salary Data: What Every HR Pro Should Know

The HR team has one of the trickiest jobs out there. One of the most sensitive areas they must deal with is employee compensation. Keeping accurate and up-to-date salary data is crucial, but it also requires a deft hand and strict confidentiality. Improper handling of salary data can lead to legal issues, privacy concerns, and damage to company culture.

What Is Salary Data?

Salary data refers to the pay details for a company’s employees. This includes their base pay, bonuses, and benefits.

Maintaining accurate and updated salary data is crucial for any company. It allows them to analyze pay trends, ensure equal pay, and make data-driven decisions about pay raises.

To manage salary data, HR teams must record details such as:

1. Job titles and descriptions
2. Pay rates and salary ranges for each role
3. Bonuses, commissions, and other monetary benefits
4. Non-monetary perks like healthcare plans or paid time off
5. Performance reviews and salary increase histories
6. Demographic data like age, gender, and education

With complete salary data, companies can identify pay gaps and make strategic decisions that help attract and retain top talent. Maintaining this data also ensures compliance with regulations like the Equal Pay Act.

For any company, salary data is the basis for building a fair, competitive, and compliant pay program. With the right details, HR teams can gain valuable insights into their pay structures. It enables them to provide better support to both employees and the business.

Methods of Finding Reliable Salary Data

To make informed pay decisions, HR teams need reliable salary data. Here are some ways to gather salary data:

Employee surveys are one method. By conducting surveys, companies can gain insight into what their employees think is fair pay for certain roles. This helps determine if current salaries are competitive and where adjustments may be necessary.

Industry reports provide broad salary ranges for distinct roles. Private company surveys or reports offer national averages that businesses can adjust to accommodate regional variances.

Other companies also participate in formal salary surveys. Groups like consulting firms or non-profits conduct surveys on pay and benefits within sectors, locations, or job groups. Joining in such surveys can be informative, though responses remain anonymous.

Using multiple data sources helps create the most complete picture of the pay landscape. While no approach is perfect, combining field reports, surveys, and employee feedback is vital for HR teams. It equips them with the tools to make fair and competitive pay decisions.

Understanding Salary Data Privacy Regulations

Keeping employee salary data private is crucial. There are regulations in place to protect sensitive financial data in the U.S.  The Equal Pay Act of 1963 and Title VII of the Civil Rights Act of 1964 forbid pay inequity based on gender, race, and ethnicity.

Revealing an employee’s pay without consent violates their right to privacy. Sharing salary data can damage work relationships and company culture. Employees may feel resentful if they find out colleagues earn more, even if their pay is fair.

Certain states have added laws guarding wage privacy. In California, companies cannot ask applicants about their pay history or share employees’ pay with others. In Colorado, companies must get written consent to disclose pay.

Maintaining the privacy of salary data builds trust in the workplace. Companies must implement clear policies and training to ensure compliance with all related regulations. Keeping salary data private is a vital part of running an ethical business.

Best Practices for Securely Storing Employee Salary Data

Best practices for securely storing salary data include:

• Limited Access

Only authorized HR staff must have access to employee salary data. Companies must keep this data secure and private, stored on an internal server with limited login access.

• Encryption

Companies must encrypt salary data to prevent unauthorized access. Encrypting data allows access only to those with the encryption key. This adds an extra layer of protection for sensitive salary data.

• Physical Security

Companies must keep any physical records of salary data in a locked cabinet within a locked room. Only select HR staff must have access to the keys for these cabinets and rooms. This limits potential physical security breaches.

• Regular Audits

HR teams must regularly audit salary data access to detect unauthorized logins or data access. Audits help identify any potential data breaches, allowing for immediate resolution. Monitoring and auditing help ensure the security and privacy of salary data.

• Clear Policies

Companies must have clear policies around salary data privacy and security. These policies outline who can access the data, its storage and encryption, the auditing schedule, and sanctions for unauthorized access. Well-defined policies help convey the importance of security to those who interact with salary data.

FAQs on Access and Disclosure of Salary Data

HR teams usually receive questions about employee salary data. Common FAQs and appropriate handling techniques include:

1. Who has access to employee salary data?

   Typically, only HR staff and payroll managers have direct access to full salary data. Managers may have access to salary scales for budgeting, but not employees’ exact pay. Employees can request their own salary data, but not their colleagues’ pay.

2. Can employees discuss their salaries?

   In the U.S., the National Labor Relations Act protects employees' rights to discuss their pay. But certain companies still discourage it. HR teams must remain neutral if employees come to them with questions.

3. How to keep salary data secure?

   Companies must keep salary data private and secure, limiting access to those who need it for their job functions. They must lock physical files and encrypt digital data, protected with a password. HR teams must educate employees with access to privacy policies and the sensitivity of the data.

4. When can the company disclose salary data to third parties?

   The company can only disclose salary data to third parties with written consent from the employees. They can also share it as part of a legally mandated request, such as a court order. The company must explain company policies on disclosure and get written permission before releasing personal salary data.