Pay Transparency: Why It Matters

Pay Transparency is term you may have heard a lot lately, and if you own a business and haven't heard about it, it's important to know about it

What is Pay Transparency?

Pay transparency is the practice of openly sharing compensation information and is a concept that has been gaining momentum in recent years. It not only refers to disclosing pay practices with current employees but also prospective ones, and the level of transparency can widely vary from firm to firm and state to state. While some may view discussing salaries as taboo, pay transparency is becoming more acceptable due to a growing emphasis on pay equity and legal requirements.

As of now, ten states have successfully implemented pay transparency laws, with several others proposing legislation, making it essential for businesses to understand and adapt.

Why Was Pay Transparency Introduced?

The push for pay transparency is rooted in the principle of pay equity, which asserts that “equal work deserves equal pay,” regardless of gender, race, ethnicity, or any other characteristic unrelated to job performance. By requiring companies to disclose salary information, these laws aim to eliminate discriminatory practices and ensure fair pay across all demographics. Transparency in pay is seen as a significant move towards closing gender and racial wage gaps, holding employers accountable, and fostering trust within the workforce.

How Does it Impact Business?

One of the most significant benefits of pay transparency is improved company culture. By openly sharing salary information, companies are forced to critically evaluate their pay practices and confront any inconsistencies in their compensation practices. This process not only aligns compensation structures with principles of fairness and equity but also signals to employees that the organization is committed to transparency and integrity.

This can create a more transparent and trusting work environment where employees feel valued and respected. When employees believe that their compensation is fair and based on clear, equitable criteria, their trust in the company grows. This trust is key to strong employee retention, as employees are more likely to remain with an organization that they perceive as fair and just in its compensation practices.

Pay transparency also has the potential to reduce gender pay disparities. By making salary information public, companies can no longer easily obscure discriminatory practices. This can empower employees, to advocate for equal pay and hold their employers accountable for fair compensation.

In addition to fostering a more inclusive and equitable workplace, pay transparency can also enhance the candidate experience. Job seekers often want to know what they can expect in terms of salary before applying for a position. Transparent pay practices allow companies to attract more engaged candidates who align with the organization’s pay philosophy. This upfront honesty about compensation helps in setting clear expectations, which can lead to more productive interviews, quicker hiring decisions, and a smoother onboarding process.

Are There Any Challenges?

Research indicates that pay transparency can boost productivity, as employees are often more motivated when they clearly understand how their compensation is tied to their performance. However, implementing pay transparency is not without its difficulties, such as fostering unhealthy competition among employees and creating tension during salary negotiations. Despite these challenges, many companies are realizing the benefits of pay transparency and are taking steps to implement it in their organizations. By promoting open communication about salaries and addressing issues of bias and pay equity, companies can create a more inclusive and fair workplace that attracts and retains top talent.

Ultimately, while the road to pay transparency may have its obstacles, the potential rewards—such as improved morale, stronger retention, and a more equitable workplace—make it a worthwhile pursuit. Companies that successfully navigate these challenges can position themselves as leaders in creating a fair, transparent, and motivating work environment that attracts and retains top talent.

What is the current law?

State	Bill	Requirements	Effected Employer	Effective date
California	SB 1162	Must disclose salary range in all job postings, including for jobs that can be done remotely from the state.	Employers with 15 or more employees, with at least 1 working in California	January 1, 2023
		Must disclose position’s salary range to current employees upon request.	Employers with 1 or more employees
Colorado	EPEW Act Equal Pay for Equal Work Act	Must disclose in all job postings, including for jobs that can be done remotely from the state: A salary range A general description of any bonuses, commissions, or other forms of compensation A general description of all benefits	Employers with at least 1 employee working in Colorado	January 1, 2021
Connecticut	HB 6380	Must provide wage range information to an applicant upon the earliest of: The applicant’s request; or Prior to or at the time the applicant is made an offer of compensation. Must provide an employee the wage range for the employee’s position upon: Hiring Change in position Employee’s request	Employers with at least 1 employee working in Connecticut	October 1, 2021
Hawaii	Hawaii Pay Transparency Law SB 1057	Must disclose salary ranges and hourly rates in external job listings that must “reasonably reflect” actual expected compensation. Equal pay for substantially similar work through the prohibited of discriminate between employees because of any protected category	Employers with 50+ employees	January 1, 2024
Illinois	Illinois Pay Transparency Law HB 3129	Must provide pay ranges and benefits in all job postings as of January 2025.	Employers with 15+ employees	January 1, 2025
Maryland	HB 123 Equal Pay for Equal Work Law	Must provide the wage range to applicants upon request	Any employer engaged in business in the state of Maryland	October 1, 2020
Nevada	SB 293	Must provide applicants who have completed an interview for a position the wage or salary range or rate for the position. Must provide the wage or salary range or rate for a promotion or transfer to a new position if an employee has: Applied for the promotion or transfer; Completed an interview for the promotion or transfer or been offered the promotion or transfer; and Requested the wage or salary range or rate for the promotion or transfer.	Any employer in Nevada	October 1, 2021
New Jersey (Jersey City)	Jersey City Ordinance 22-026 Jersey City Ordinance 22-045	Must provide the salary range and description of benefits in all ads for any job, transfer or promotion opportunity.	Employers with five or more employees within Jersey City	April 13, 2022
New York	S.9427-A/A.10477	Must disclose the compensation or a range of compensation in any advertisement for a job, promotion, or transfer opportunity. Must also provide the job description for such job, promotion, or transfer opportunity, if such a description exists.	Employers with 4 or more employees	September 17, 2023
New York (New York City)	NYC Ordinance	Must disclose a minimum and maximum annual salary or hourly wage in any advertisement for a job role that will or may be filled in New York City, including for jobs that can be done in the field or remotely from the city. Must disclose a minimum and maximum salary range in any posting for internal promotions or transfer opportunities.	Employers with 4 or more employees, with at least one in New York City	November 1, 2022
New York (Ithaca)	Ithaca Ordinance	Must disclose minimum and maximum hourly or salary compensation in any postings for a job, promotion, or transfer opportunity.	Employers with 4 or more employees	September 1, 2022
New York (Westchester County)	Westchester County Local Law No. 119	Must disclose minimum and maximum salary range on all job ads for roles that will or may be filled in Westchester, including for jobs that can be done remotely from the county. Must disclose the minimum and maximum salary in any posting for promotion or transfer opportunity.	Employers with 4 or more employees	November 6, 2022
Ohio (Cincinnati)	City of Cincinnati Ordinance	Must provide a salary range upon a candidate’s request after conditional offer of employment is made.	Employers with more than 15 employees in Cincinnati	March 13, 2020
Ohio (Toledo)	City of Toledo Ordinance	Must provide a salary range upon a candidate’s request after conditional offer of employment is made.	Employers with 15 or more workers in Toledo	June 25, 2020
Rhode Island	S0270A	Must disclose: The wage range upon applicant's request and prior to discussing compensation; The wage range for the employee's position, both at the time of hire and when the employee moves into a new position; and The wage range during employment, upon request by an employee.	Rhode Island employers with 1 or more employees in the state	January 1, 2023
Washington	SB 5761 Equal Pay and Opportunities Act	Must disclose: The wage scale or salary range and a general description of all the benefits and other compensation in each posting, including for jobs that can be done remotely from the state; and The wage scale or salary range for the employee's new position, upon request of an employee offered an internal transfer to a new position or promotion.	Employers with 15 or more employees, if they have one or more Washington-based employees or if they engage in business in Washington or recruit for jobs that could be filled by a Washington-based employee, including remote jobs.	January 1, 2023