What Do Salary Transparency Laws Mean for Your Business?
Salary transparency laws are on the rise. Here’s what HR teams should know.
Pay equity—the idea that employees doing comparable work should receive comparable salaries—may seem like common sense. Various federal laws have been designed to promote equitable pay. The Equal Pay Act of 1963 requires men and women to be paid the same for equal work, while Title VII of the Civil Rights Act of 1964 prohibits discrimination in many areas of employment, including pay. Additionally, Executive Order 11246 and the National Labor Relations Act protect employees’ right to discuss their compensation with co-workers and others, which can help expose wage imbalances.
Despite these efforts, pay disparity still exists. According to data from the Department of Labor, women earn 76 cents for every dollar men earn, while black and Hispanic men earn 76 cents and 73 cents, respectively, for every dollar White men earn. On the contrary, Asian men earn $1.12 for every dollar earned by their White male counterparts.
Traditionally, a new hire’s salary is based in part on past compensation, which can unintentionally perpetuate pay inequity. A growing number of states and cities have passed laws that support pay equity by prohibiting employers from asking candidates for their salary histories. Many locations are going a step further with legislation that requires salary transparency.
Salary transparency laws generally require employers to post salary information publicly in job postings and may also require sharing salary information with employees internally. Such laws are gaining traction due to popular demand. Consider the results of the 2022 Pay Transparency Report:
- 79% of respondents want some type of salary transparency.
- 32% want complete transparency (all employees’ compensation made public).
- 68% would change jobs for an employer with greater salary transparency—even if no pay increase were involved.
New salary transparency laws went into effect January 1, 2023, in California, Rhode Island, and Washington, and the coming year is likely to bring more legislation. Keep reading for an overview of current salary transparency laws that may affect you.
Salary transparency laws by location
| State | Effective date | Who must comply | Requirements |
|---|---|---|---|
| California | January 1, 2023 | Employers with 15+ employees | Job postings must include a salary range. Salary range for an employee’s current job must be provided upon request. Private employers with 100+ employees face expanded data reporting requirements and fines for non-compliance. |
| Colorado | January 1, 2021 | Colorado employers; multi-state employers with one or more Colorado employees that are posting remote jobs Colorado residents may fill | Postings for jobs, transfers, or promotions must include compensation or a range of compensation and benefits information. |
| Connecticut | October 1, 2021 | All employers | Salary range must be shared with candidates a) upon request or b) before or when an offer is made (whichever is earliest). A salary range must be shared with employees at hiring, when the employee’s job changes, or upon request. |
| Jersey City, NJ | April 13, 2022 | Employers with 5+ employees | Postings for jobs, transfers, or promotions must include compensation or a range of compensation and benefits information. |
| Maryland | October 1, 2020 | All employers | A salary range must be shared with job candidates upon request. |
| Nevada | October 1, 2021 | All employers | A salary range must be shared with job candidates after an interview, and with employees who have applied for a promotion or transfer, been offered a promotion or transfer after an interview, or have requested the information. |
| New York | September 1, 2023 | Employers with 4+ employees | Any posting for a job, promotion, or transfer opportunity must include a salary range and (if available) a job description. |
| New York City | November 1, 2022 | Employers with 4+ employees | Except for jobs that cannot or will not be performed in the city, any posting for a job, promotion, or transfer opportunity must include a salary range. |
| Ithaca, NY | September 1, 2022 | Employers with 4+ employees | Except for temporary jobs at temporary agencies, any posting for a job, promotion, or transfer opportunity must include a salary range. |
| Westchester County, NY | November 6, 2022 | Employers with 4+ employees | Except for temporary jobs at temporary agencies or in posted “Help Wanted” signs, any posting for a job, promotion, or transfer opportunity must include a salary range. This applies to any job that must be performed (even in part) in the county, including remote work. |
| Cincinnati, OH | March 1, 2020 | All employers with 15+ employees, including city government but exempting local, state, or federal government | A salary range must be provided to candidates upon request after a conditional offer of employment is made. |
| Toledo, OH | July 4, 2020 | All employers with 15+ employees, including city government but exempting local, state, or federal government | A salary range must be provided to candidates upon request after a conditional offer of employment is made. |
| Rhode Island | January 1, 2023 | All employers | A salary range doesn't have to be listed in job postings, but must be shared with candidates who request them. A salary range for an employee’s current job must be shared with the employee upon request. |
| Washington | January 1, 2023 | Employers with 15+ employees | Job listings must include a salary range, any other compensation, and benefits. |
Transparency is a worthwhile endeavor
It’s easy to see how salary transparency benefits job candidates and employees. For employers, the reasons are more nuanced.
Some organizations have made headlines by pushing back on salary transparency laws or trying to skirt the regulations. For example, recruiting without posting jobs online so they don’t have to share a salary range or publishing job listings with salary ranges of $100,000 or more, negating the goal of salary transparency. After Colorado enacted salary transparency laws, some major employers have posted remote job opportunities that stated they wouldn’t consider candidates who lived in Colorado.
This pushback may be, in part, related to the potential obstacles when implementing salary transparency. If transparency reveals large disparities in your salaries that seemingly aren’t based on objective criteria, it could negatively affect employee morale and employee trust. Seeing higher pay ranges for similar jobs at competing companies could also motivate your employees to seek jobs elsewhere. Additionally, adjusting salaries to improve pay equity can be expensive, especially for large employers or those with major wage imbalances.
The initial hurdles shouldn’t deter employers from enacting transparency, as there are many advantages:
- Improve hiring efficiency: When candidates drop out of the hiring process, after going through the application and interview process, it’s time-consuming and costly for employers. More than half (53%) of workers in a recent Monster.com poll said they wouldn’t apply to a position that didn't include a pay range. When the salary range is stated upfront, candidates can decide if the wages are in alignment with their desired pay prior to applying.
- Attract candidates: Salary transparency enhances your company image as a trustworthy employer, helping you attract and retain talent. In a recent survey, 85% of workers say they’re more likely to apply for a job that lists a salary in the job description.
- Enhance employee satisfaction: Open communication about salaries can positively impact employee trust, while also increasing motivation and engagement.
- Improve job performance: Transparency can make employees feel more valued and in turn, increase job performance. Additionally, the ability to see that certain jobs command higher salaries can motivate employees to upskill in order to advance into those roles.
Conclusion
If employees’ embrace of the concept is any indication, salary transparency seems to be the wave of the future. Almost 90% of Gen Z employees in a 2022 survey said they’d feel comfortable talking about compensation with colleagues–and employers are beginning to take note. In states and cities without salary transparency laws, 17% of businesses are sharing salary ranges voluntarily, while 62% say they either plan to do so or are contemplating it.
Implementing salary transparency is not a simple task and may first require buy-in from leadership, but it reaps benefits for employers and employees alike. In today’s hiring environment, a competitive advantage is important to not only attract candidates but also retain engaged and satisfied employees.
Disclaimer
Nothing in Checkr’s Blog should be construed as legal advice, guidance, or counsel. Companies should consult their own legal counsel about their compliance responsibilities under the FCRA and applicable state and local laws. Checkr expressly disclaims any warranties or responsibility or damages associated with or arising out of information provided.