In 2024, pay transparency laws are reshaping the employment landscape across the United States, making it essential for HR professionals to stay informed. With various states implementing regulations that require employers to disclose salary ranges in job postings and provide compensation information upon request, understanding these laws is critical for compliance and equitable hiring practices. Tanca recognizes the importance of these developments as organizations strive to foster a culture of transparency and fairness. HR must navigate these evolving regulations to effectively manage talent and promote trust within the workplace. Read more to explore the specific laws by state.

What are pay transparency laws?

Pay transparency laws require employers to share information about employee compensation, either with employees or the public, to promote fairness and reduce pay disparities related to gender, race, and ethnicity. These laws typically require employers to include salary ranges in job postings, disclose pay details upon request, and ensure employees are informed about their compensation.

While the specific rules differ by jurisdiction, the overall goal is to increase transparency in hiring and establish more equitable pay structures. Many states have implemented pay transparency laws, reflecting a broader movement toward accountability and empowering employees to make informed career decisions.

Benefits Of Pay Transparency For Employees And Employers

Promotes Fair Pay

Pay transparency helps address wage disparities by ensuring employees in similar roles receive equitable compensation. By openly sharing salary ranges, companies can better identify and correct pay gaps based on gender, race, or ethnicity. This commitment to fairness not only benefits individual employees but also strengthens the organization by fostering a more inclusive and equitable workplace.

Builds Trust

Transparency in pay practices cultivates a sense of trust between employees and employers. When compensation information is openly shared, it signals a commitment to fairness and accountability. This transparency can improve employee morale, boost engagement, and strengthen workplace relationships, creating an environment where employees feel confident that they are treated equitably.

Improves Retention

Employees are more likely to remain loyal to a company when they believe they are being compensated fairly. Pay transparency helps mitigate frustrations over hidden pay scales and can significantly reduce turnover. Organizations that implement clear and open pay policies often see increased employee loyalty and retention, as workers feel more valued and respected.

Enhances Recruitment

Job seekers increasingly prioritize pay transparency when evaluating potential employers. Posting clear salary ranges attracts more qualified candidates and helps streamline the hiring process by setting clear expectations upfront. This approach reduces the time spent negotiating salary and improves the overall efficiency of recruitment, resulting in stronger talent acquisition.

Boosts Productivity

Employees who understand how their compensation is linked to performance are often more motivated and engaged. Pay transparency allows high-performing employees to see the direct connection between their contributions and their earnings. This sense of fairness and recognition can lead to increased productivity, benefiting both the employee and the organization's overall performance.

Effective Pay Transparency Laws

Maryland

Effective October 1, 2024, Maryland's Wage Transparency Law requires all employers to disclose wage ranges, a general description of benefits, and any additional compensation in both internal and external job postings.

This law applies to positions physically performed, at least in part, in Maryland, including remote jobs. If a job posting is not available, employers must provide this information before discussing compensation with applicants.

Violations can lead to penalties, including fines of up to $600 for repeated offenses, and employers must maintain compliance records for three years post-filling or posting the position.

Minnesota

Effective January 1, 2025, Minnesota will implement new pay transparency laws that require employers with 30 or more employees to disclose salary information in job postings. Under this law, employers must include a "starting salary range" or a "fixed pay rate" in each job posting. The salary range must reflect the employer's good faith estimate of the minimum and maximum compensation for the position and cannot be open-ended.

In addition to salary details, employers are also required to provide a general description of all benefits and other compensation associated with the position, including health and retirement benefits. This comprehensive approach aims to give potential employees a clearer understanding of what they can expect in terms of both pay and overall compensation.

The law applies to all employers with 30 or more employees at one or more sites in Minnesota, encompassing corporations, nonprofits, and governmental subdivisions. It also extends to job postings made by third parties on behalf of these employers, ensuring broad compliance across various sectors.

Enforcement of the law will be managed by the Minnesota Department of Labor and Industry and the Attorney General, who will have the authority to investigate violations. While specific penalties for noncompliance have not been outlined, employers should take this legislation seriously to avoid potential repercussions.

Vermont

On June 4, 2024, Vermont Governor Phil Scott signed House Bill 704 into law, establishing new pay transparency requirements that will take effect on July 1, 2025. This legislation mandates that employers with five or more employees disclose compensation ranges in job advertisements. Specifically, employers must include the minimum and maximum annual salary or hourly wage expected for the position at the time the advertisement is created.

The law applies to job openings both physically located in Vermont and remote positions where the majority of work is performed for a Vermont-based office. Employers are required to disclose compensation information for all job postings, including those for internal promotions and transfers. However, there are exceptions for positions that are commission-based; employers need only indicate that the role is commission-based without disclosing specific compensation ranges.

In addition to salary disclosures, advertisements for tipped positions must specify that they are tipped roles and provide the base wage or range of base wages. Importantly, employers can hire candidates for more or less than the advertised range based on factors outside their control, such as the applicant's qualifications or current labor market conditions.

The law also includes anti-retaliation provisions, prohibiting employers from refusing to interview or hire individuals who assert their rights under this law. Enforcement will be handled by the Vermont Attorney General’s Office, which will publish guidance on the law's implementation by January 1, 2025.

States with Existing Pay Transparency Laws

California

California's pay transparency laws, established under Senate Bill 1162 (SB 1162), took effect on January 1, 2023. This legislation requires employers with 15 or more employees to disclose pay scales in all job postings, including those made through third parties. The "pay scale" refers to the expected hourly wage or salary for the position and does not include bonuses, tips, or commissions. Employers are prohibited from simply linking to the pay scale; it must be included directly in the job advertisement.

The law also mandates that employers provide current employees with their position's pay scale upon request. Additionally, employers cannot inquire about an applicant's salary history during the hiring process, promoting a more equitable approach to compensation. If an employer fails to comply with these requirements, they may face civil penalties ranging from $100 to $10,000 per violation.

Colorado

Colorado's pay transparency laws are governed by the Equal Pay for Equal Work Act (EPEWA), which took effect on January 1, 2021. This comprehensive legislation requires employers to disclose salary ranges in job postings and aims to promote pay equity and transparency across the state.

Under the EPEWA, all employers with at least one employee in Colorado must include compensation information in their job postings. Specifically, employers are required to disclose the hourly or salary compensation or a range of pay, along with a general description of benefits and other compensation associated with the position. This applies to both internal and external job postings, including remote positions that could be performed in Colorado.

The law prohibits employers from asking about an applicant's salary history and from relying on it when determining pay. Employers must also notify current employees about promotional opportunities and provide information about who was selected for a role after hiring decisions are made.

To ensure compliance, employers are required to maintain records of job descriptions and wage rate history for each employee for the duration of their employment and for two years after their departure. Violations of the EPEWA can result in fines ranging from $500 to $10,000 per violation, depending on the nature of the infraction.

Amendments to the EPEWA, effective January 1, 2024, further clarify employer responsibilities regarding job postings and internal notifications. These amendments emphasize the importance of transparency in hiring practices and aim to reduce wage disparities based on gender or other protected characteristics.

Connecticut

Connecticut's pay transparency law, officially known as House Bill 6380 or Public Act 21-30, took effect on October 1, 2021. This legislation aims to promote workplace equity and transparency by requiring employers to disclose salary ranges for vacant positions. The law encompasses several key components designed to enhance pay equity.

Employers must provide applicants with the wage range for the position they are applying for at the earliest of the applicant's request or prior to making a job offer. Additionally, current employees must be informed of the wage range for their positions upon hiring, when their position changes, or upon their first request. The "wage range" is defined as the range of wages an employer anticipates relying on when setting compensation for a position.

The law also prohibits employers from seeking a prospective employee’s wage history or using it to determine compensation. Employers cannot retaliate against applicants who refuse to disclose their salary history, ensuring that candidates are not penalized for exercising their rights.

Furthermore, employees are granted the freedom to discuss their wages with others without fear of retaliation from their employers. This provision encourages open dialogue about pay and helps foster a more equitable workplace environment.

In terms of enforcement, employees or prospective employees can bring civil actions against employers for violations within two years of the alleged infraction. Successful claimants may be entitled to compensatory and punitive damages, as well as attorney's fees and costs.

Hawaii

Hawaii's pay transparency law, Senate Bill 1057, will take effect on January 1, 2024. This legislation mandates that employers with at least 50 employees disclose salary ranges or hourly wage rates in job postings. The disclosed compensation must "reasonably reflect" the actual expected pay for the position, although the law does not define what constitutes "expected compensation."

Certain exceptions apply to this law. It does not cover job listings for internal transfers or promotions within the same employer, nor does it apply to public employee positions where compensation is determined through collective bargaining agreements. This aspect distinguishes Hawaii's law from those in other states that require similar transparency for internal positions.

The law also expands Hawaii's existing equal pay legislation by prohibiting pay discrimination based on various protected categories, not just sex. This includes race, gender identity, sexual orientation, age, religion, color, ancestry, disability, marital status, and others. Employers must ensure that employees performing "substantially similar work" receive equitable pay.

While the law outlines these requirements, it does not specify penalties for non-compliance. However, employees and job applicants can file complaints with the Hawaii Civil Rights Commission if they believe their rights under this law have been violated. Employers may face civil action for compensatory and punitive damages if found in violation.

New York

New York's pay transparency law, which took effect on September 17, 2023, mandates that employers with four or more employees disclose salary ranges in job postings for new hires, promotions, and transfers. The law requires employers to provide the minimum and maximum annual salary or hourly wage for the position being advertised. This applies not only to jobs physically performed in New York but also to positions that will be performed outside the state if the employee reports to a supervisor or office located in New York.

Employers must include a written job description in their postings if one exists. The law also prohibits employers from asking applicants about their salary history and includes protections against retaliation for employees who discuss their compensation with coworkers.

Penalties for non-compliance are structured as follows: $1,000 for the first violation, $2,000 for the second violation, and $3,000 for any subsequent violations. Employers are encouraged to maintain records related to compensation ranges and job descriptions to ensure compliance.

In addition to the statewide law, several local jurisdictions in New York, including New York City and Ithaca, have their own pay transparency regulations. Employers operating in these areas must comply with both state and local laws, which may have additional requirements.

Rhode Island

Rhode Island's pay transparency law took effect on January 1, 2023, amending the existing Equal Pay Law to enhance wage equity and transparency. Under this law, employers are prohibited from requesting salary histories from applicants before making an offer of employment. Instead, they must provide the wage range for the position upon request, both to applicants and current employees.

The law defines "wage range" as either a formal pay scale or the actual range of wages for those currently holding equivalent positions. Employers must disclose this information before discussing compensation with applicants and at the time of hire or when an employee moves to a new position.

Additionally, the law expands protections against pay discrimination beyond gender to include race, color, religion, sexual orientation, gender identity or expression, disability, age, and country of ancestral origin. Employees cannot be paid less than others performing "comparable work," which broadens the scope of what constitutes equal work.

To encourage compliance, Rhode Island provides an affirmative defense for employers who conduct a good faith self-evaluation of their pay practices within two years prior to a pay equity lawsuit. If they can demonstrate that they have corrected any unlawful wage differentials revealed by this evaluation, they may avoid liability.

While civil penalties for violations can range from $1,000 to $5,000, there is a grace period until December 31, 2024, during which no penalties will be assessed for non-compliance. Employers are also required to post notices about employee rights under this act in a conspicuous location in the workplace.