The whole purpose of such legislation is to discourage companies from maintaining egregiously dysfunctional salary allotment systems (for example, based on candidate's negotiation skill, or salary history) which are exactly what expose the company to such "risk" in the first place.
But promotion isn't about good performance per se. It's about next-level scope and responsibility, influencing larger groups of people, owning bigger pieces of the pie. To the extent that promo committees held the line on this, strong in-the-trenches engineers faced stagnant comp and eventually took outside offers. But managers are wily and committees couldn't hold the line completely, so there was also a lot of title inflation.
Worst of all was the effect on culture. Because the only way to get paid more was to get promoted, and the only legitimate way to get promoted is to drive grand initiatives.... everybody started manufacturing grand initiatives. Why get something done in a week on your own, when you could chair a weekly cross-functional sync with a dozen stakeholders for 12 months? Why do housekeeping on your platform when you could lead a deprecation, rewrite, and migration for 100 dependent teams?
Now maybe you would expect managers to put a stop to this kind of gaming. But managers want their stars to get ahead! If only for the selfish reason of not having to replace them. It's also good for the manager's own promotion path to have successful proteges. So managers play along and even coach their reports on how to turn the team's needs into "senior engineer" or "staff engineer" projects that will smell right to a promo committee. When all they really wanted to do was give the guy a raise.
All this in the name of pay equity. I'm glad the pendulum swung back.
There's no reason a company needs to adopt that kind of a system ("raises only via promotion") just because expected salaries now have to be posted along with job listings.
I can see the attraction in that idea! But when people aren’t actually, in their hearts, quite that committed to solidarity, their ambitions and inequalities find other, costlier ways of expressing themselves.
I suppose people can fight over the levels but at least you could say SDE 1 gets $X SDE 2 gets $Y, and SDE 2 is just a more competent SDE 1.