Pay Transparency Is Changing the Rules for Employers — Here’s What You Need to Know

As a business owner or manager, you’ve probably been hearing a lot about pay transparency over the past few years.

It’s not a complicated concept. Pay transparency means publicly disclosing the range of compensation paid for a specific job in your company. Which means that if, for example, you’re looking to hire a staff accountant, you would, in your job post, state that the position pays between a certain minimum and maximum level. Some jurisdictions require this information to be disclosed for internal promotions and transfers. In many cases, compensation includes benefits and bonuses too.

Some of my clients oppose these kinds of rules because it puts them in an inferior position when negotiating compensation with prospective employees, and that’s not an unreasonable point of view. But times have changed, and workplaces are different from what they were even a decade ago. Pay transparency is a growing trend nationally, and if you’re an employer, you need to make sure you’re prepared.

Some of my clients ask why all the fuss? The reason for this trend comes down to one word: discrimination.

Pay transparency is about discrimination

We’ve all read the studies as to how female workers have been historically paid less than their male counterparts. It’s a fact that’s hard to argue. The good news is that the situation is improving and compensation has reached parity in several areas. But there’s still a long way to go. And, now that female workers make up almost half of the U.S. workforce, it has become more important than ever to make sure that there’s a level playing field.

Enter the concept of pay transparency. If a pay range is not disclosed for a job, then that could potentially put a female worker at risk of earning less. Why? Because the data shows there is a likelihood that they earned less than their male counterparts, so if you ask what they were earning at their previous job, they could start at a lower pay scale. That doesn’t sound very fair, right?

Pay transparency removes this risk. Most rules forbid employers from asking candidates about what they did at their last job. Instead, employers must disclose the pay range available for the job they’re offering so there’s little room for debate.

This isn’t just a female worker issue. Many other workers face their own form of discrimination. Some employers illegally base their hiring decisions — and compensation rates — on factors such as race, gender and other personal aspects that have nothing to do with a worker’s ability to do their job. By at least setting a range of pay, prospective employees at the very least know a fair number, regardless of any other factors.

It’s a local issue, not federal

Congress attempted to pass pay transparency legislation in 2023 and 2025 and failed. It is highly unlikely that we’ll see pay transparency regulations in the near future. Like many other workplace issues, from minimum wage to overtime, the current administration prefers to let those rules be made by local governments. And local governments have been responding.

States such as California, Colorado, Connecticut, Hawaii, Illinois, Maryland, Massachusetts, Minnesota, Nevada, New Jersey, New York, Rhode Island, Vermont, Washington and Washington, D.C. already have legislation in place that requires employers to include pay ranges when posting jobs. And pay transparency rules aren’t limited to just states. Various cities in New York State, like Albany and Ithaca, have similar rules in place as do other cities in states like New Jersey and Ohio.

And those are some of the areas with existing laws on the books. There are a number of other states — including Alaska, California, Connecticut, Iowa and others — that have legislation proposed to further strengthen or to establish pay transparency laws for their local employers.

Remember that it’s not just where your business is located. It’s where your employees are located. If your company uses remote workers, you should be well-versed in the pay transparency laws that may be in effect in each worker’s home state.

Actions to take

Pay transparency is a trend that isn’t going away. Both my clients and their employees agree that these rules aren’t unreasonable. And compliance is not difficult. So here are some actions to consider.

For starters, act as if your state requires pay transparency, even if it doesn’t. It’s a good practice. It’s a good reflection of your workplace and you as a business owner. And if you believe that these rules are ultimately coming anyway, it will only help you to get ahead of compliance.

Use a labor attorney to help establish a policy. Pay transparency is a legal issue and because of that, it’s helpful to have an attorney involved in creating your company’s policy. The rules can also vary by state. Non-compliance can result in fines, penalties and bad press. This policy will ultimately be included in your handbook for public scrutiny, so you want to make sure it has a sound legal basis, demonstrates your commitment not to discriminate and also minimizes your risks. Given the changing nature of these rules, it’s a policy that should be reviewed annually. And don’t play games. Some companies have attempted to skirt the rules by offering wide, mostly unreasonable ranges of pay, which effectively negates the value of the rule. That’s not a great idea.

Use an HR expert. In these times of tight labor, writing an enticing job post can be the difference between attracting the right person and losing them. Attorneys can do this, but in my experience, HR consultants do this better. A good one will be well-versed in pay transparency rules and can help you write a post that addresses this requirement. Also important: when you start disclosing pay ranges, it may force you to revisit the compensation of existing employees to keep things consistent and an HR expert can help with that process, too.

Finally, remember why you’re doing this. Being upfront about pay can help disqualify potential employees, which can save everyone a lot of time. These rules are popular among workers, particularly workers under the age of 40, who make up half of the country’s workforce.

Committing to pay transparency says a lot about your business and will help you attract top talent, build trust and boost your retention. It’s an operational commitment that should be done not just for job postings, but as part of an annual review of compensation paid to all employees. People notice these things.

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As a business owner or manager, you’ve probably been hearing a lot about pay transparency over the past few years.

It’s not a complicated concept. Pay transparency means publicly disclosing the range of compensation paid for a specific job in your company. Which means that if, for example, you’re looking to hire a staff accountant, you would, in your job post, state that the position pays between a certain minimum and maximum level. Some jurisdictions require this information to be disclosed for internal promotions and transfers. In many cases, compensation includes benefits and bonuses too.