Pay range disclosure laws trending in the direction of greater transparency
In an effort to address pay inequities, many state and local governments have passed pay range disclosure laws in recent years. Currently, 19 states, cities, and municipalities (California; Colorado; Connecticut; Hawaii; Illinois; Maryland; Massachusetts; Minnesota; Nevada; New York; Rhode Island; Vermont; Washington; Cincinnati, Ohio; Toledo, Ohio; Ithaca, New York; Jersey City, New Jersey; New York City; and Washington, D.C.) have enacted pay range disclosure laws, and pay policies across industries have trended in the direction of greater transparency.
Like laws that prohibit employers from inquiring about a candidate’s salary history, pay range disclosure laws generally require that employers provide the hourly rate or pay range for any position to all applicants, regardless of protected classifications. Some pay disclosure laws require employers to provide the pay range for a given job only upon an applicant’s request, and others mandate this practice without prior inquiry.
The current wave of pay disclosure law enactments is happening across the country. Eight states (Connecticut, New York, Rhode Island, Illinois, Massachusetts, Maryland, Minnesota, and Vermont, as well as Washington, D.C.) have passed pay range disclosure laws in the past 2 years, and many have legislation pending executive action. Additionally, companies across multiple industries have increased their attention to training managers in pay communications. Earlier this year, a Payscale report found that 60% of surveyed employers were publishing pay ranges in job advertisements compared with 45% 1 year prior. Some believe this provides employers with a competitive advantage, as candidates see pay disclosures as responsive to ongoing concerns about pay disparities.
Due to this increase in regulatory pressure, employers are now required to share pay range information with both external and internal job candidates. Offering greater pay transparency can improve the hiring process overall and address concerns about how individual pay aligns with organizational pay and reward structures.
Navigating the new regulations
Mandates for employers to disclose pay range information show current employees how their salaries stack up to those offered to prospective candidates. This, in turn, has the potential to reveal pay inequities. Given the widespread implementation of remote work, pay disclosure laws also have the effect of increasing transparency from employers that aren’t located in a state that has mandated transparency. When employers post positions that can be performed remotely, it’s important they follow all applicable pay disclosure laws where the work is to be performed, as well as where the employer is recruiting new hires.
Alongside greater pay transparency requirements, there’s also emerging regulatory pressure to comply with “pay data” collection by state government agencies, with many states now requiring certain businesses to include pay information in reports to state enforcement agencies. In August 2024, Massachusetts passed “An Act Relative to Salary Range Transparency,” which requires employers to provide pay transparency in job postings and comply with certain wage reporting to the secretary of the commonwealth. This includes workforce demographic and pay data categorized by race, ethnicity, sex, and job category.
This tide of greater transparency has had the concomitant effect of changing organizational values, culture, and overall employee expectations. While not greatly cited, pay transparency risks could include increased compensation questions, pay negotiation requests, and unpredictable pay change requests.
Key takeaways for employers
With the rise of online hiring and remote work, it’s essential for employers to stay informed about current and upcoming legislation on pay range disclosures, particularly when posting job openings nationwide. As these laws evolve, business leaders should prioritize compliance and adopt proactive communication strategies.
Here are some key tips and takeaways:
- Stay informed: Regularly review state and local regulations to ensure compliance with pay disclosure requirements, especially as laws can vary widely by location.
- Embrace transparency: Consider adopting pay range disclosures as a standard practice in job postings, as this not only fulfills legal obligations but can also enhance your company’s reputation as a fair employer.
- Invest in training: Equip your management teams with the skills to communicate about pay structures effectively. This will help address employee concerns and reduce the likelihood of compensation-related disputes.
- Monitor pay equity: Conduct regular audits of your compensation practices to identify and address any disparities. This proactive approach can mitigate risks associated with potential legal challenges.
- Leverage competitive advantage: Transparency in pay can attract top talent, as candidates increasingly seek employers who openly address pay disparities.
By adopting these strategies, organizations can navigate the complexities of pay range disclosure laws while fostering a culture of equity and trust.
Simplify multi-state employment law research
In response to the rapid emergence of pay disclosure regulations, BLR has updated HR Hero®’s State Law Chart Builder. Previously, state law summaries on pay range disclosures were provided to subscribers within the scope of equal pay laws under state and city statutes, which commonly fall under state antidiscrimination laws. The tool now features a dedicated subtopic area for pay range disclosure laws, providing easy access to state-specific regulatory insights, allowing subscribers to easily search for pay disclosure regulations across multiple states and municipalities.
