Is Your Company at Risk of Noncompliance with Salary Transparency Laws?
Failing to comply with new salary transparency laws could result in hefty fines — and damage your organization’s reputation.
For years, hiring managers and candidates have sidestepped one essential question: How much does the job pay? But that’s changing. A wave of new legislation is making salary disclosure a growing standard in the workplace.
Following new laws in states like New York, Washington, and California, employers across the U.S. are beginning to adopt pay transparency to remain competitive. In fact, the number of job listings that include salary details jumped from 14.7% in 2020 to 43.7% in 2023, according to recent reports.
Even if your company isn’t yet required to disclose salaries, the momentum is clear. But what exactly is pay transparency, and what does it mean for employers?
What Is Pay Transparency?
Pay transparency — also called salary transparency — is the practice of openly sharing compensation details like wages, salary ranges, and benefits, either internally with employees or publicly in job postings. It reflects how open an organization is about compensation practices and can include:
- Publishing pay ranges in job listings
- Explaining how compensation is calculated
- Encouraging open conversations about pay between managers and employees
- Conducting audits to ensure fair pay across the workforce
Governments and companies alike are implementing these practices as a step toward fairness and equity.
Why Employees Want Transparency
A recent survey by HR analytics firm Visier found that 79% of U.S. workers want salary transparency. It fosters trust, improves job satisfaction, and helps close longstanding gender and racial wage gaps.
Where It’s Required by Law
More than 20 states have already enacted or proposed salary transparency laws. For example:
- California now requires employers to list pay ranges in all job postings (effective January 1, 2023).
- New York mandates pay range disclosures for any job, promotion, or transfer that can be performed in the state (effective September 2023).
- Connecticut, Rhode Island, Nevada, Illinois, and Maryland have laws requiring employers to provide salary information during hiring or upon request.
Even companies based elsewhere must comply if they hire remote workers in these states.
What Happens if You Don’t Comply?
Penalties differ by state, but they can be steep. In California, violations can lead to fines of up to $10,000 per incident. Companies must take steps to:
- Define and document salary ranges for all roles
- Ensure compensation is equitable and free of discrimination
- Review internal policies to align with evolving legal standards
What Employers Should Do Now
With or without legal requirements, embracing pay transparency is a smart move. It can:
- Improve candidate attraction and trust
- Boost retention through equitable practices
- Reduce pay inequities and mitigate risk of legal issues
Creating clear, fair compensation structures — and being transparent about them — isn’t just about compliance. It’s about building a workplace people want to be part of.
