Pay Transparency: What States Have It & Why It’s Important

In today’s economy, it is more important than ever for workers to be able to trust their employers.

Pay transparency means that employers disclose how much they are paying all of their employees, from the CEO and other leadership positions to middle management, entry-level and even custodial staff.

And when studies show that 50% of employees say that without pay transparency, they are likely to leave their current job, one of the best ways that employers can build trust with their employees is to provide this information.

In this article, we give you a complete breakdown of pay transparency:

  • potential benefits of pay transparency
  • potential downsides of pay transparency
  • companies that offer pay transparency
  • pay transparency laws by state (who has it & who doesn’t)

What are the benefits of pay transparency?

Pay transparency can help to close pay gaps

Over the past few years, there has been a collective push to create a more level playing field for all employees, especially in terms of race and gender pay inequity.

When everyone knows what everyone else is making, it’s harder for employers to get away with paying women and people of color less than their white male counterparts.

Pay transparency uses objective data to determine salaries

Rather than using subjective factors like an employee’s negotiating skills or how well they get along with their boss, pay transparency can help to create a more objective workplace and prevent discrimination based on the personal preferences of high-level decision-makers.

Pay transparency can attract top talent when hiring

When job seekers know that a company is transparent about pay, they are more likely to apply for a position.

Pay transparency can also help to boost morale, motivation, and retention in the workplace. Employees who feel like they are being paid fairly are more likely to be engaged and productive.

What are the downsides of pay transparency?

Pay transparency may cause friction among employees

If some employees feel like they are being paid more than others for doing the same job, it can create tension and resentment between coworkers.

Employers may also have a hard time retaining top talent if they are paying less than their competitors.

Pay transparency may be difficult to get buy-in from employers

Employers may be resistant to pay transparency because they feel like it gives away too much information about their business. They may also be worried about the potential for lawsuits if employees feel like they are not being paid fairly.

What companies offer pay transparency?

Microsoft pay transparency policy

Following a new law in Washington that will require companies to disclose salaries on all new job postings in America, Microsoft — headquartered in Washington — will begin implementing pay transparency moving forward, making it the first major US corporation to adopt this practice.

Buffer pay transparency policy

Starting in 2013, in its endeavor to live up to its core company value of transparency, social media management platform Buffer made all employee salaries available for anyone to view online.

While Buffer currently only employs about 80 people, this bold stance on pay transparency has many questioning why more companies don’t disclose their employees’ salaries to the public.

Starbucks pay transparency policy

In its commitment to achieving and now maintaining 100% gender pay equity, Starbucks has included pay transparency in its best practices and tools for closing the gender pay gap.

Other best practices include not asking for pay history and creating all compensation offers consistently.

Pay transparency laws by state

There are 17 states in the U.S. that currently have laws around pay transparency that require them to provide candidates with pay ranges during the application process if asked.

We’ve highlighted a few of these pay transparency state laws and what they require:

California pay transparency law

In 2016, California passed a pay transparency law that requires employers to provide candidates with pay ranges during the application process if asked. This law also prohibits employers from asking job candidates about their salary history.

Colorado pay transparency law

Colorado pay transparency law, Colorado’s Equal Pay for Equal Work Act went into effect in 2021 and requires businesses to provide salary ranges and available benefits for all open positions.

This law even goes as far as to require employees to notify current employees of all promotion opportunities.

Maryland pay transparency law

Not only are employers in Maryland required to provide salary information to applicants upon request, the Equal Pay for Equal Work Act also prohibits employers from asking for a candidate’s prior pay history.

Nevada pay transparency law

While states like California require to provide salary information upon request during the application process, Senate bill 293 in Nevada makes it compulsory for employers to automatically provide salary range information to candidates after their first interview whether they’ve asked for it or not.

Rhode Island pay transparency law

Starting in January of 2023, employers in Rhode Island will not only be required to provide salary ranges to candidates who request it, pay ranges for promotions and transfers must be disclosed, as well.

Washington pay transparency law

In Washington, the Equal Pay and Opportunities Act requires employers to provide salary information to candidates, but only when they request it during the interview process. This also extends to current employees who ask for salary ranges to ensure they are being paid fairly.

New York City pay transparency law

While not a state law, New York City has recently adopted pay transparency requirements. As of May 15, 2022 employers with four or more workers in New York City are required to post salary ranges for any job within NYC.

U.S. States without pay transparency laws

33 states in the U.S. do not have pay transparency laws — meaning employers in these states are not required to provide applicants with the salary ranges they pay for positions during the hiring process.

  • Alabama
  • Alaska
  • Arizona
  • Arkansas
  • Florida
  • Georgia
  • Hawaii
  • Idaho
  • Indiana
  • Iowa
  • Kansas
  • Kentucky
  • Mississippi
  • Missouri
  • Montana
  • Nebraska
  • New Mexico
  • North Carolina
  • North Dakota
  • Ohio
  • Oklahoma
  • Pennsylvania
  • South Carolina
  • South Dakota
  • Tennessee
  • Texas
  • Utah
  • West Virginia
  • Wisconsin
  • Wyoming

Why is pay transparency important?

In a world where the collective workforce is pushing for more diversity and equity in the workplace, pay transparency can help to close pay gaps and create a more level playing field for all employees.

Ultimately, employees want to know what they are worth and whether they are being compensated fairly through pay transparency and tools like our 2022 Salary Guide.

When employers are required to communicate what everyone in the company is paid, it’s harder for them to get away with underpaying their employees.

This can help to create a fairer workplace and prevent discrimination all while attracting and retaining top talent.

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