Preparing for Salary Transparency: What Employers Should Do Now

The Transparency Trend

Pay transparency is moving from a progressive ideal to a legal requirement. Several states and cities have enacted or are considering laws requiring employers to disclose salary ranges in job postings, provide pay ranges to applicants upon request, or prohibit inquiries into salary history. Even where not legally required, employee expectations around pay transparency are rising.

Employers who proactively address pay transparency will be better positioned than those who scramble to comply when a law passes in their jurisdiction.

What Transparency Laws Typically Require

While requirements vary by jurisdiction, common elements include:

Salary range disclosure in job postings. Some laws require employers to include a pay range in every job advertisement. The range must reflect the actual minimum and maximum the employer in good faith expects to pay, not an artificially wide range designed to avoid meaningful disclosure.

Salary range upon request. Other laws require employers to provide the pay range to applicants at a specified point in the hiring process — after the first interview, upon request, or at the time an offer is extended.

Salary history bans. A growing number of jurisdictions prohibit employers from asking applicants about their current or prior compensation or using salary history to set pay. The rationale is that basing pay on history can perpetuate existing pay inequities.

Internal disclosure. Some laws require employers to provide pay ranges to current employees for their position or for positions they are applying for internally.

The Internal Equity Challenge

The most challenging aspect of pay transparency is not the legal compliance — it is what happens when employees can see how their pay compares to their colleagues'. Disparities that were invisible become visible, and employees expect explanations.

Before disclosing pay information, you need to ensure your compensation practices can withstand scrutiny.

Conduct a Pay Equity Audit

Review your compensation data by role, department, tenure, and demographic group. Look for disparities that cannot be explained by legitimate factors like experience, performance, education, or geographic location.

If you find unjustified disparities — and most employers do — develop a plan to close them. This may involve targeted pay adjustments phased over one or more budget cycles.

Work with legal counsel during this process. An attorney-directed pay equity audit may receive attorney-client privilege protection, shielding the analysis from discovery in potential litigation.

Formalize Your Compensation Structure

If you do not already have one, develop a formal compensation structure with defined pay ranges for each position or job level. A compensation structure should include:

• Job levels or grades that group positions with similar scope and responsibility
• Pay ranges with a defined minimum, midpoint, and maximum for each level
• Criteria for placement within the range — what determines where an individual falls (experience, performance, tenure, certifications)

A formal structure provides a defensible framework for pay decisions and makes it possible to answer the question every transparency law invites: "Why am I paid what I'm paid?"

Document Pay Decisions

For each employee, document the factors that determined their pay rate and any subsequent adjustments. When a hiring manager recommends a starting salary, record the basis for the recommendation. When pay raises differ between employees, document the performance or market data that justified the difference.

Manager Training

Managers will be on the front line of pay transparency conversations. Train them on:

• How the compensation structure works and how pay ranges are determined
• How to explain pay decisions to employees without disclosing other employees' individual compensation
• What they can and cannot say about pay in hiring conversations
• How to handle requests for raises in a structured, consistent manner

Managers who are uncomfortable discussing compensation — or who lack knowledge of how pay decisions are made — will struggle in a transparent environment.

Communication Strategy

If you plan to proactively share pay information with employees (whether required by law or not), plan the rollout carefully:

1. Brief managers first so they can field questions from their teams
2. Explain the compensation philosophy — what factors determine pay levels and how ranges are set
3. Acknowledge that adjustments may be needed and describe how you plan to address any gaps
4. Provide a channel for employees to ask questions confidentially

Moving Forward

Pay transparency is not just a compliance exercise — it is an opportunity to strengthen trust in your organization. Employees who understand how pay decisions are made and believe the process is fair are more engaged and less likely to leave over compensation concerns. The employers who benefit most from this trend are those who use it as motivation to ensure their pay practices are genuinely fair and defensible.