Pay Transparency Laws: What Employers Need to Know Now

Pay transparency legislation is expanding rapidly across the United States. These laws, which generally require employers to disclose salary ranges in job postings or upon request, represent a significant shift in how compensation information is shared. Employers who prepare now will be ahead of the curve as more jurisdictions adopt similar requirements.

The Current Landscape

Pay transparency laws vary significantly by jurisdiction but generally fall into several categories:

Salary range in job postings

Several states and municipalities require employers to include a salary range or wage scale in all job postings:

• Colorado: The Equal Pay for Equal Work Act, effective January 1, 2021, was among the first to require salary ranges in job postings for positions that could be performed in Colorado
• New York City: Local Law 32, effective November 1, 2022, requires employers with four or more employees to include a minimum and maximum salary in job advertisements
• Washington State: Effective January 1, 2023, employers with 15 or more employees must include salary ranges and a general description of benefits in job postings
• California: Effective January 1, 2023, employers with 15 or more employees must include pay scales in job postings

Additional states and cities continue to introduce similar legislation.

Salary range upon request

Some jurisdictions require employers to provide salary range information to applicants upon request, at certain stages of the hiring process, or to current employees:

• Connecticut: Employers must provide the wage range for a position upon request or at the time of an offer, whichever comes first
• Nevada: Employers must provide the salary range to applicants who have completed an interview
• Rhode Island: Employers must provide salary range information to applicants and current employees upon request

Salary history bans

A related but distinct category prohibits employers from asking about or relying on a candidate's salary history:

• Over 20 states and numerous municipalities have enacted salary history bans
• These laws prevent employers from asking about prior compensation during the hiring process and/or from using salary history to set compensation
• Some laws also prohibit employers from seeking salary history from prior employers or other sources

Compliance Requirements

What constitutes a good-faith salary range

Most laws require employers to provide the salary or hourly wage range they genuinely expect to pay for the position:

• The range must reflect actual expectations, not an artificially broad span (e.g., "$30,000 to $300,000" would not satisfy good-faith requirements)
• Ranges should be based on established pay scales, budgeted amounts, or the range actually paid to current employees in comparable positions
• Open-ended ranges (e.g., "$60,000 and up") generally do not comply

Which postings are covered

Coverage varies by jurisdiction but typically includes:

• External job postings on job boards, company career pages, and social media
• Postings through third-party recruiters (the employer remains responsible for compliance)
• Internal postings for promotion or transfer opportunities (in some jurisdictions)
• Remote positions that could be performed in the jurisdiction, even if the employer is located elsewhere

Penalties for non-compliance

Enforcement mechanisms vary:

• Fines per violation, sometimes per posting
• Private right of action allowing applicants or employees to sue
• Complaints to state labor agencies
• In some jurisdictions, first-offense penalties are limited to a warning with escalating penalties for subsequent violations

Practical Steps for Employers

1. Conduct a compensation audit

Before publishing salary ranges, ensure your current pay practices are defensible:

• Review whether current employee compensation is consistent within comparable roles
• Identify and address pay compression (where new hires earn close to or more than tenured employees)
• Ensure pay differences are explainable by legitimate factors (experience, performance, skills, location)
• Address any disparities that correlate with protected characteristics

2. Establish pay structures

If you do not already have formal pay ranges for each position, create them:

• Benchmark against market data using salary surveys for your industry and geographic area
• Define minimum, midpoint, and maximum for each position or job level
• Document the factors that determine where within the range an individual employee is paid
• Review and update ranges at least annually to reflect market changes

3. Update job postings

• Add salary ranges to all postings, even in jurisdictions that do not yet require it (candidates increasingly expect this information and skip postings without it)
• Include a description of benefits and other compensation elements where required
• Train recruiters and hiring managers on how to discuss compensation ranges with candidates

4. Prepare for employee questions

Publishing salary ranges for open positions will prompt questions from current employees:

• Be prepared to explain how current employee pay fits within the range
• If discrepancies exist, have a plan to address them (market adjustments, timeline for corrections)
• Train managers to have productive compensation conversations
• Consider proactively sharing pay range information with existing employees before they see it in job postings

5. Multi-state strategy

Employers operating across multiple jurisdictions should consider adopting a single national policy that meets the most stringent requirements rather than managing a patchwork of jurisdiction-specific approaches:

• Include salary ranges in all postings regardless of location
• Eliminate salary history questions from all applications and interview processes
• Document pay structures and the factors that influence individual pay decisions

The Business Case for Transparency

Beyond compliance, pay transparency offers genuine benefits:

• Attracts more applicants by eliminating uncertainty about compensation
• Reduces time wasted interviewing candidates whose expectations do not align with the budget
• Builds trust with employees who understand how pay decisions are made
• Identifies and corrects internal pay equity issues before they become legal problems
• Positions your organization favorably as transparency becomes the norm

Pay transparency is not a passing trend. It reflects a fundamental shift in candidate and employee expectations. Employers who embrace transparency proactively will be better positioned for compliance, recruitment, and retention.