Key insights
- Pay transparency laws — require companies to disclose wage ranges or a defined salary amount in job postings thereby impacting company’s recruiting, compensation, and HR strategies.
- These laws are created to reduce pay disparities among employees and applicants.
- Companies can address challenges through evaluation of their job recruitment, HR, and compensation practices.
Use pay transparency rules to your organization’s benefit.
As pay transparency laws continue to grain traction across the United States, the regulations — which mandate disclosing wage ranges in job postings — are reshaping how companies attract talent and address employee pay disparities.
Understanding these changes is crucial not only for compliance, but also for leveraging pay transparency as a strategic advantage.
What is pay transparency?
Pay transparency is a broad term that can include a variety of laws addressing wage discussion and disclosure. It includes requirements such as posting jobs with wage ranges, prohibiting salary history inquiries, and allowing employees to exchange wage information.
While the freedom to discuss one’s wages is a covered under the National Labor Relations Act, the requirement to display the intended salary or range alongside job postings is currently left to cities and states to enact themselves.
States have listed a variety of valid business and employment reasons behind their decisions to effectuate these wage law changes, and it appears this trend will continue throughout other states in the coming years.
Pay transparency laws by state
Many states and some cities have already passed wage range disclosure pay transparency laws, while others are set to go into effect on January 1, 2025, and throughout the rest of 2025.
Recent and upcoming pay transparency laws
| State | Effective date | Covered employers |
|---|---|---|
| Illinois | January 1, 2025 | Employers with 15 or more employees |
| Maryland | October 1, 2024 | All employers |
| Massachusetts | July 31, 2025 | Employers with 25 or more employees |
| Minnesota | January 1, 2025 | Employers with 30 or more employees |
| Vermont | July 1, 2025 | Employers with five or more employees |
States and localities with wage range disclosure pay transparency laws already in effect include:
- California
- Cincinnati, Ohio
- Colorado
- Connecticut
- Hawaii
- Ithaca, New York
- Jersey City, New Jersey
- Nevada
- New York
- New York City, New York
- Rhode Island
- Toledo, Ohio
- Washington
- Washington, D.C.
- Westchester County, New York
The impact of pay transparency laws on employers
Pay transparency laws — which require companies to disclose wage ranges, or a defined salary amount in job postings — come with a mix of benefits and challenges.
Pay transparency benefits
Pay transparency laws can reduce pay disparities, giving employees and applicants insight into an organization’s compensation plan. A more transparent practice can also help streamline the recruitment process, attracting more qualified applicants who align with your compensation practices, as well as providing clarity for existing employees. Additionally, these laws may have a positive impact on workplace culture enhancing trust among the organization and its employees through open communication and honest dialogue.
Pay transparency challenges
As remote work and multi-state options become more common, adhering to diverse state pay transparency laws can become increasingly complex. Each state enforces specific requirements for salary disclosures and compensation practices, which can pose challenges for companies managing remote or geographically dispersed teams.
With the rise of pay transparency laws, failure to first evaluate and address existing compensation structures may lead to internal dissatisfaction as employees may perceive discrepancies between advertised ranges and their own pay.
Unless pay transparency is codified into federal law, employers should anticipate the need to prepare for the trend of pay transparency to continue to expand throughout the states, requiring potentially significant adjustments to your compensation structure, internal communication, employee engagement, and development strategies.
How to comply with pay transparency laws
Take steps to help avoid costly financial penalties and provide employees and applicants with accurate and legally compliant pay information. Consider these strategies:
- Review and update compensation practices and documentation to align with evolving state laws.
- Implement and review internal systems for tracking compensation data.
- Evaluate compensation structures and pay strategy to align new job openings with internal pay to mitigate perceived discrepancies.
- Consider your remote workforce, where you will be posting the job opportunity, and evaluate the specific rules required for each state where you operate.
How CLA can help with pay transparency law compliance
CLA’s talent solutions team works with employers in a variety of states to help them understand, uphold, and implement employment requirements including pay transparency laws. Reach out for assistance in understanding the many pay transparency laws and how they could fit into your recruiting and human resources strategy.
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