Pay transparency happens when employers publicly disclose how much a job pays. The degrees of transparency can range from companies sharing a salary range on a job listing, to disclosing how salaries are determined and even sharing individual employees’ salaries.
In recent years, numerous states have enacted at least some level of pay transparency requirement.
Why is pay transparency important?
Pay transparency reduces pay inequities, which in turn could prevent wage discrimination by gender, sexual orientation, age, religion and more, according to February 2023 research published in the Harvard Business Review. The intent is simple: If you know the range an employer is willing to pay for a job, then you know how much you can expect to earn. That knowledge could help existing employees and new hires during salary negotiations.
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What do pay transparency laws require?
Dickens points out that federal and state government jobs have had salary ranges listed for years. But the requirements for private companies take a slightly different form, depending on the state and, in some cases, the city. Here’s what a law may look like:
- Employers are required to disclose wage rates and salary ranges upon request by a job candidate or employee.
- Employers must file annual reports that disclose salary and wage compensation.
- Employers must list pay ranges internally to existing employees and externally in job postings.
Employers who violate pay transparency laws will usually be subject to a fine and a period to correct the violation. Individuals may file complaints with local or state department of labor offices.
Which states have pay transparency laws?
SixFifty, a compensation law practice, maintains an up-to-date database of state-by-state pay transparency laws. Click on the map to see the law where you live. Roughly two-thirds of states have some kind of law on the books. Some counties and cities have their own requirements.
