Not long ago, pay transparency was almost unthinkable in most of the business world. Salary discussions were considered taboo, except in specific one-on-one circ*mstances—typically, a job offer.
But the employment universe continues to change, and now pay transparency laws are popping up everywhere, especially at the state level.
That’s not necessarily a bad thing, because pay transparency offers benefits to both employers and employees. But it is one more HR compliance issue to keep on your radar—especially as new salary disclosure laws are introduced.
What is Pay Transparency?
Pay transparency is the disclosure of a position’s salary range, usually to job applicants and employees. The end goal is to promote greater fairness in how businesses compensate employees.
The thinking is when companies are required to share their pay practices, they’ll make more effort to standardize them, which will help close the gender pay gap and other wage gaps based on race and other demographic factors.
Pay transparency laws have multiple facets, which often include:
- Disclosing salary ranges to applicants and employees
- Protecting employees’ rights to discuss wages with coworkers
- Better recordkeeping; broader access to pay data
At the federal level, two pay transparency bills were introduced in Congress last year:
- The Salary Transparency Act – which would require employers to disclose each position’s wage ranges to applicants and employees, and
- The Pay Equity for All Act – which would prohibit employers from basing job offers on an applicant’s wage history
Neither bill has passed to date. However, that’s not the case on the state and local levels.
Pay Transparency Laws by State
To date, 10 states have enacted salary disclosure laws, and the list is growing. Here’s a brief snapshot of pay transparency laws by state.
California
As of 1/1/2023, California employers with at least one employee must disclose salary range information to current employees upon request.
In addition, employers with 15 or more employees must:
- Disclose a position’s pay scale in job postings and
- Refrain from asking applicants about their salary history
Fines range from $ 100 to $10,000 per violation.
Colorado
Effective 1/1/2024, Colorado employers with 1 or more employees must:
- Disclose a position’s pay scale and other benefits in job posts, along with the application window
- Notify employees internally of all job opportunities
Fines range from $500-$10,000 per violation.
Connecticut
Effective 10/1/2021, Connecticut employers with 1 or more employees must:
- Disclose a position’s wage range to applicants, either when they ask or before making an offer, whichever comes first
- Disclose salary range to employees at the time of hire, whenever they change positions or when they ask
- Refrain from asking applicants about their salary history
Employers who violate the law may be sued by applicants and employees.
Hawaii
Effective 1/1/2024, Hawaii employers with 50 or more employees must include salary ranges/hourly rates in job postings. This does not apply to internal transfers and promotions.
The Hawaii Civil Rights Commission accepts violation complaints, and employers may face lawsuits.
Illinois – Becomes Effective 1/1/2025
Effective in 2025, Illinois employers with 15 or more employees must disclose a position’s wage scale in job posts, along with additional benefits.
The law will also apply to remote workers who work part-time in IL or report to a supervisor/worksite based in IL.
Fines will range from $500-$10,000 per violation.
Maryland
Effective 10/1/20, all employers must:
- Provide applicants with a position’s wage range upon their request
- Refrain from asking applicants for their wage history or directing third parties to research it
Fines may total up to $300 for a first violation and up to $600 for additional violations within three years.
Nevada
Effective 10/1/2021, all employers (and employment agencies) must:
- Provide salary information to applicants following an interview.
- Provide salary information to employees seeking a transfer or promotion, if they request it, and if they applied, interviewed, or received an offer for it.
- Refrain from seeking the salary history of applicants.
Penalties may total up to $5,000 per violation.
New York
Effective 9/17/2023, employers with 4 or more employees must:
- Disclose salary ranges in job posts of positions that can or will be performed in NY, along with job descriptions
- Disclose salary ranges to current employees about internal promotions and transfers
Fines may total up to $1,000 for the first violation, $2,000 for the second, and $3,000 for subsequent violations.
Rhode Island
Effective 1/1/2023, employers must:
- Disclose wage ranges
- to applicants who request it or before discussing compensation
- to employees at the time of hire or before they move into a new position
- Refrain from seeking wage histories from applicants
Fines may total up to $1,000 for the first violation, $2,500 for the second (within five years) and $5,000 thereafter within seven years.
Washington
Effective 1/1/2023, employers with at least 15 employees must:
- Disclose wage scales in job posts, along with other benefits.
- Disclose salary ranges upon request to employees seeking transfers or promotions
Fines may total up to $500 for the first violation and up to $1,000 or 10% (whichever is greater) thereafter. Individuals can also sue employers.
States Without Pay Transparency Laws (Yet)
Even if you’re not currently subject to pay transparency laws, you may soon be. Many states are considering salary disclosure laws and other forms of equal pay legislation, including:
- Alaska
- Kentucky
- Maine
- Massachusetts
- Michigan
- Missouri
- Montana
- New Jersey
- Oregon
- South Dakota
- Vermont
- Virginia
- West Virginia
- The District of Columbia
In addition, a handful of cities (and one county) have passed their pay transparency laws, including:
- Cincinnati, OH
- Ithaca, NY
- Jersey City, NJ
- New York City, NY
- Toledo, OH
- Westchester County, NY
For more on these specific laws, see our sources below.
Benefits of Pay Transparency Laws
Although some employers worry about the impact of pay transparency, it does offer several advantages. They advance fair pay initiatives, and at the end of the day, that’s a win-win for everyone.
In addition, employees want it. According to one study, 80% of applicants said they’re less likely to respond to a job post that doesn’t specify a salary range. Therefore, wage transparency benefits recruiting.
While posting wage ranges may empower employees to engage in more vigorous salary negotiation, empowered employees are satisfied employees, so pay transparency may improve retention as well.
Take Action with Pay Transparency
Pay transparency is a key HR issue that continues to trend. Even if you’re not currently subject to salary disclosure laws, you might want to develop a pay transparency policy for its business benefits.
To stay current on compliance changes, subscribe to our employment law updates. Or better yet, learn how VensureHR can manage HR for you.
