What Is Pay Transparency and Which States Require It?
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Pay transparency occurs when an employer provides information about compensation. Eight states and six local areas require pay transparency. Pay transparency is gaining traction throughout the United States, with the aforementioned states and localities having passed pay transparency laws since 2020.
While the vast majority of states do not require pay transparency, many employers are seeing it as a trend. Among more than 1,300 human resources professionals surveyed, 42% of their organizations or more are required by state or local laws to include pay ranges in their job postings, according to Society of Human Resource Management data released on Equal Pay Day, March 14, 2023.
The survey data also shows that more than two in three HR professionals say that, even when pay transparency is not required by law, their organizations still tend to list starting pay in job postings. Emily M. Dickens, head of public affairs for SHRM, says this data signals that companies are anticipating that pay transparency laws will spread.
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What is pay transparency?
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.
»What does this mean for you? Pay transparency may affect your job search or next raise
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.
The SHRM survey found that 73% of U.S. workers are more likely to trust organizations that provide pay ranges, and about the same number are less interested in applying to jobs without pay ranges listed.
While many workers value these pay ranges, Dickens advises prospective and current employees to use them as just one facet of measuring the worth of an employer. “There are all of these components that go into a compensation package, and people are shortchanging themselves by just looking at a number,” Dickens says.
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?
Here are the states and cities with pay transparency laws in place, according to state and local official websites, press releases and other documents:
California
Date effective: Jan. 1, 2023.
A change to the existing California Equal Pay Act requires employers with 15 or more employees to include the pay scale in any job posting if the position could ever be potentially filled in California — that means remote workers count, too.
Violation consequences: Civil penalties of no less than $100 and no more than $10,000 per violation.
Colorado
Date effective: Jan. 1, 2021.
Under Colorado’s Equal Pay for Equal Work Act, employers must announce to all employees all advancement opportunities and job openings, as well as the pay ranges for those positions.
Violation consequences: Fines between $500 and $10,000 per violation.
Connecticut
Date effective: Oct. 1, 2021.
Under Public Act No. 21-30, employers are required to provide the wage range for a position to any applicant or current employee who requests it.
Violation consequences: Civil penalty against the employer.
Maryland
Date effective: Oct. 1, 2020.
Under Maryland’s Equal Pay for Equal Work Law, employers are required to provide a wage range for a position if the applicant requests it.
Violation consequences: Civil penalties occur after a second violation, starting with a $300 fine per applicant, per violation and increasing to $600 per applicant for further violations.
Nevada
Date effective: Oct. 1, 2021.
Under Nevada state law, employers are required to provide the wage or salary range or rate for all new positions, promotions or position transfers.
Violation consequences: $5,000 for each violation in addition to investigative costs and attorneys’ fees.
New York
Date effective: Sept. 17, 2023.
New York state is expected to begin enforcing its statewide pay transparency law in September. The law requires employers to disclose the salary or salary range in any advertisement for a job, promotion or transfer opportunity within a company.
Violation consequences: Civil penalties of $1,000 for the first violation; $2,000 for the second violation; and $3,000 for the third and any subsequent violations.
There are three additional areas of New York state with their own transparency laws, meaning businesses must comply with both the state and local laws in those areas. Those areas are listed below among the cities that have pay transparency laws.
Rhode Island
Date effective: Jan. 1, 2023.
Employers must provide a wage range upon request from an existing or prospective employee.
Violation consequences: Fines starting at $1,000 for the first violation; $2,500 for a second violation within a five-year period since the first one; and increasing to $5,000 for two or more violations in a seven-year period.
Washington
Date effective: Jan. 1, 2023.
If asked, employers must offer a wage scale to existing employees prior to an internal transfer and must provide the salary range in job postings. This applies only to employers with 15 or more employees.
Violation consequences: Civil penalty up to $500 for a first violation and up to $1,000 or 10% of damages (whichever is greater) for any subsequent violations.
» MORE: What is the unemployment rate?
Which cities and counties have pay transparency laws?
Cincinnati, Ohio
Date effective: March 13, 2020.
The city of Cincinnati Ordinance No. 83 prohibits employers with 15 or more employees from inquiring about an applicant’s compensation history, and employers must provide the pay scale for a position if the applicant is offered a job.
Violation consequences: Job applicants have a private cause of action for compensatory damages and legal fees.
Ithaca, New York
Date effective Sept. 1, 2022.
In addition to the upcoming New York state law, under Ithaca’s local law, employers must list minimum and maximum compensation for jobs, as well as promotions and transfer opportunities.
Violation consequences: Unclear.
Jersey City, New Jersey
Date effective: April 13, 2022.
An amendment to Chapter 148 of Jersey City code says that employers or independent contractors that operate in Jersey City and have five or more employees must provide the minimum and maximum salary and/or hourly wage for all open positions.
Violation consequences: The maximum penalty for any violation is a fine of up to $2,000, or imprisonment or community service for 90 days.
New York City
Date effective: Nov. 1, 2022.
In addition to the upcoming New York state law, under New York City law, employers must list salary ranges. This bill applies only to positions that can and will be performed in New York City.
Violation consequences: First violation complaints won’t incur penalties as long as the employer remedies the violation within 30 days. For any violations that are not fixed or any subsequent violations, employers face penalties of up to $250,000.
Toledo, Ohio
Date effective: June 25, 2020.
The Pay Equity Act prohibits employers with 15 or more employees from inquiring about an applicant’s salary history. Those employers must provide the pay scale for a position if the applicant is offered a job.
Violation consequences: Job applicants have a private cause of action for compensatory damages and legal fees.
Westchester County, New York
Date effective: Nov. 6, 2022.
This applies to any positions that are required to be performed, in whole or in part, in Westchester County.
In addition to the upcoming New York state law, under this amendment to a Westchester County law, employers with four or more employees must include salary ranges on job postings.
Violation consequences: Civil penalty in the amount of up to $125,000 for employers who commit an unlawful discriminatory practice. The penalty is up to $250,000 for those who commit an unlawful discriminatory practice with willful, wanton or malicious intent.
