States and other jurisdictions across the country are implementing pay transparency regulations to encourage employers to self-assess pay disparities along gender, racial, and ethnic line in their workforce and to promote voluntary compliance with equal pay and anti-discrimination laws. These laws serve to ensure that employers efficiently identify wage patterns and allow for effective enforcement of equal pay or anti-discrimination laws, when appropriate.
Additionally, many of these state regulations seek to provide a way to reasonably disclose salary ranges that allow job applicants to make a truly informed decision about their professional future. Further, pay transparency can lead to greater compliance with pay equity legislation, such as the 1963 Equal Pay Act and the 1964 Civil Rights Act, to provide equal pay for equal work.
There are an ever-increasing number of pay transparency laws working in favor of job seekers. The government mandates gaining ground across the U.S. continue to lead to more employers providing this vital piece of information that helps job seekers make decisions in their best interests.
"Pay transparency in the United States is headed for a banner year in 2023," says Forbes contributor Lisa Wallace. There has been a wave of pay transparency legislation over the past few years across some of the country's most populous states, including California, Washington, and New York, and many more states are in the process of drafting similar legislation.
Understanding Pay Transparency Laws
The specific requirements may vary depending on the state or other jurisdiction, but their purpose is to ensure greater pay transparency to promote increased fairness and reduce pay disparities based on factors such as race, gender, and ethnicity.
Here are a few examples of what employers might be required to do to comply with pay transparency laws, depending on their specific jurisdiction:
- Provide job candidates with a salary range for a specific posted position at a set point during the hiring process.
- Inform current employees of a salary range when changing jobs or upon hire.
- Include a realistic salary range in job postings.
Such laws are intended to help employees and employers find each other and connect on a more transparent level while prohibiting any retaliation against current employees who discuss their pay with co-workers.
The California Civil Rights Department has shared some basic requirements of the California Pay Transparency Law to serve as an example:
- An employer with 15 or more employees must provide the pay scale for a position in any job posting.
- At least one of the 15 employees must currently be located in California.
- Finally, employers must provide a pay range if the position will ever be filled and conducted in-person or remotely.
Pay Transparency Laws Across the United States
You may be wondering which states have pay transparency laws. Several states are leading the charge in passing this type of legislation. Each state has its own nuances, such as the required disclosure of wage ranges or when and how that range must be provided to job applicants or employees. These states include:
- California: Employers with 15 or more employees must provide a salary or hourly wage range in the job posting. Employees can ask for the salary range of their current position upon request. Employers will 100 or more employees must file and annual Pay Data Report.
- Colorado: Employers with at least one employee in the state must include an overview of all the benefits and compensation offered, along with the salary or hourly pay range, in job listings.
- Connecticut: Employers with at least one employee in the state must provide salary ranges for applicants or existing employees. An employee may also request pay information during a position change.
- Maryland: All employers in the state must provide pay or salary ranges upon request.
- Nevada: All employers and employment agencies must provide a wage or salary range for a position, transfer, or promotion.
- New York: Starting September 17, 2023, all employers and employment agencies with four or more employees must provide a range of compensation in job listings.
- Rhode Island: Employers with at least one employee in the state must provide wage or salary information for job applicants upon request and before discussing compensation.
- Washington: Employers and employment agencies with 15 or more employees must provide the salary or wage range and an overview description of all benefits and compensations offered for a position in a job posting. An employee may also request pay information during a position change.
Nearly 25% of U.S. workers now live in a jurisdiction where employers are legally required to share pay ranges. Those numbers will continue to rise since several additional states have recognized the value of pay transparency and are preparing salary range transparency legislation. The following states are working on legislation that could create similar requirements in their respective jurisdictions.
- Alaska
- Georgia
- Hawaii
- Kentucky
- Maine
- Massachusetts
- Missouri
- Montana
- New Jersey
- Oregon
- South Dakota
- Vermont
- Virginia
- West Virginia
Several of the states with legislation in the works have some of the largest civilian labor forces outside of New York and California. Georgia, New Jersey, and Virginia are prime examples of states that will experience a tremendous sea change in pay transparency over the next several years.
Additionally, the U.S. House of Representatives recently introduced H.R. 1599 “Salary Transparency Act, whose purpose is: "To amend the Fair Labor Standards Act to require an employer providing an employment opportunity to disclose the wage range for such employment opportunity to employees and applicants for employment, and for other purposes." If passed, the bill could be an important step toward nationwide pay transparency.
The Benefits of Pay Transparency for Organizations and Employees
Pay transparency is important because it not only allows employees to make informed decisions—it also sets a standard for employers to comply with pay equity regulations. The goal of these regulations is to help employees better understand the salary or wage range before accepting a position. When employees know that they are receiving a fair salary or wage, they will feel greater loyalty, which can help reduce employee turnover.
To ensure your organization is offering competitive compensation, request your copy of the Nelson Connects Salary Guide and Workplace Trends Report, which provides benchmarked salary ranges for major metro markets in California and beyond.
The Future of Pay Transparency and Its Importance for Your Organization
As more states enact vital laws regarding pay transparency to support equal pay, it is more important than ever to ensure that your organization is compliant. Depending on the jurisdiction, there are steep penalties and fines that range from $100 to $250,000 per violation.
Nelson Connects is committed to the goals of these various pay transparency acts. Contact us for information on how our team addresses pay transparency with our contingent workforce.
