Massachusetts is the latest state to embrace pay transparency, aligning with a nationwide trend advocating for wage equity. On July 31, 2024, Governor Maura Healey enacted a Pay Transparency law (https://malegislature.gov/Bills/193/SD1521
) requiring employers with 25 or more employees to disclose salary ranges in all job listings. This legislation is a crucial step in the broader effort to close the gender wage gap and ensure fair compensation for all workers.
The Pay Transparency bill will go into effect on July 31, 2025, providing employers with a year to review and adjust their compensation practices. Businesses should ensure that their salary ranges are transparent, competitive in the market, and accurately reflect the roles they advertise.
What are Pay Transparency Laws?
Pay transparency laws aim to promote fair pay practices by requiring employers to disclose salary ranges for job postings. The goal is to reduce wage disparities and promote equity in the workplace, ensuring that all employees have access to information about potential earnings.
What are Salary History Bans?
In addition to pay transparency, some states (e.g., California, Colorado, Maryland) have enacted salary history bans, prohibiting employers from asking candidates about their previous salaries during the hiring process. This aims to prevent perpetuating historical pay inequalities and encourage offers based on the job's worth.
Pay Transparency Laws without Job Posting Requirements
Some states have enacted pay transparency laws that do not mandate salary disclosures in job postings. Instead, these laws may require employers to provide salary ranges upon request or during the hiring process. This approach still promotes transparency while offering flexibility to employers.
Pay Transparency Laws with Job Posting Requirements
Other states take a more stringent approach, requiring employers to include salary ranges directly in job postings. This upfront disclosure ensures complete transparency from the outset, allowing job seekers to make informed decisions without having to inquire about compensation.
Benefits and Drawbacks of Pay Transparency Laws for Job Seekers
Pay transparency laws can significantly benefit job seekers by promoting equitable pay practices and reducing wage gaps. When salary ranges are disclosed, candidates can negotiate with a clearer understanding of their worth in the job market. This encourages employers to offer competitive salaries and fosters a culture of openness, which can enhance trust between employees and management.?
However, there can also be drawbacks for job seekers. In some cases, transparency may lead to less flexibility in salary negotiations, as employers might feel constrained by the disclosed ranges. Additionally, if salary ranges are set too low, it may perpetuate a cycle of underpayment, particularly for those individuals who possess skills in high demand.?
While pay transparency laws benefit job seekers, they can also lead to dissatisfaction among current employees. When salary ranges are publicly disclosed, existing staff may compare their salaries to those of new hires or job candidates within the same range. This comparison can spark feelings of inequity, particularly if they perceive themselves as more experienced or skilled yet earning less than new employees.??
Additionally, transparency might create pressure on employers to raise salaries across the board, which could lead to budget constraints and tension within the organization. As a result, the very transparency intended to promote fairness may inadvertently cause unrest among current staff, impacting morale and productivity.?
List of States with Pay Transparency Laws and Implementation Dates
Here is an overview of key states and their pay transparency laws, including effective dates and a description of their purpose:
- California: Effective January 1, 2018. California's legislation was among the first to mandate employers to provide pay scale information during the hiring process.
- Colorado: Effective January 1, 2021, Colorado requires employers to disclose salary ranges in job postings and notify employees of promotional opportunities to promote equitable pay practices. Job postings must include a general description of all compensation and benefits, such as healthcare, retirement, and paid time off. Employers must provide a salary range by the time an offer is made, even if not requested. These requirements apply to jobs outside Colorado that “could be” performed in the state. Employers without Colorado employees are not subject to these rules until they hire someone there. The law also mandates recordkeeping.
- Connecticut: Effective October 1, 2021, Connecticut law requires employers to disclose wage range information to both job applicants and employees. Employers must provide salary range details to applicants by the time a compensation offer is made, even if the applicant does not request it.
- Hawaii: Effective January 1, 2024, Hawaii’s pay transparency law requires job postings to include an hourly rate or salary range that reflects the expected compensation. Exceptions include internal transfers or promotions, public positions with pay set by collective bargaining, and jobs at companies with fewer than 50 employees. Unlike other pay transparency laws, Hawaii's statute does not apply to internal positions.
- Illinois: Effective January 1, 2025, Illinois employers with 15 or more employees must disclose wage or salary ranges, benefits, and other compensation details in job postings. This information can be shared via electronic job posts or by linking to a public page containing the details. The law also holds third-party vendors accountable for compliance unless they can prove the employer failed to provide the required information. Employers must notify current employees of promotional opportunities within 14 days of an external job posting. The law applies to positions in Illinois and jobs outside Illinois that report to an Illinois-based supervisor or location. While employers are not required to create job postings, they may inquire about applicants' salary expectations. For non-posted jobs, compensation and benefits information must be provided upon request, prior to an offer or any compensation discussions.
- Maryland: Effective October 1, 2024, Maryland law mandates that employers provide the wage range for a position upon an applicant’s request. For job postings in Maryland, employers must include the wage range, a description of benefits, and other compensation in each listing. If no job posting exists, employers must disclose this information before discussing compensation, upon request. The law also requires employers to maintain records of employee wages, job classifications, and other employment conditions for at least three years after a position is filled, or if unfilled, three years after it was posted.
- Massachusetts: Effective July 31, 2025, employers in the state with 25 or more employees are required to include salary range information in all job postings. Additionally, they must provide pay range details to current employees under specific conditions.
- Minnesota: Effective January 1, 2025, Minnesota employers with 30 or more employees must include starting salary ranges and a general description of benefits in all job postings. This includes details on health or retirement benefits, bonuses, and other incentives. The requirement also applies to job postings made by third-party recruiters on behalf of Minnesota employers.
- Nevada: Effective October 1, 2021, Nevada law requires employers to provide wage information to job applicants after an interview and to current employees requesting details when seeking a promotion or transfer.
- New York: Effective September 2023, New York law requires employers with four or more employees to disclose the compensation range in job postings, including the minimum and maximum annual salary or hourly rate that the employer believes is accurate at the time of posting. Employers must also include a job description if one exists. The law includes recordkeeping requirements, anti-retaliation protections, and fines for noncompliance. For remote workers, the law applies to jobs performed at least partially within New York State. Additionally, several local jurisdictions in New York have their own pay transparency laws.
- Rhode Island: Effective January 1, 2023, Rhode Island law mandates that employers provide salary range information during the hiring process and to employees upon request, promoting transparent and equitable compensation practices.
- Vermont: Effective July 1, 2025, Vermont employers with four or more employees will be required to include compensation ranges (minimum and maximum annual salaries or hourly wages) in all job advertisements. This requirement extends to job openings with a base wage or range for tipped workers, with the exception of positions where employees are paid on a commission basis.
- Washington: Effective January 1, 2023, Washington state requires employers with 15 or more employees to include salary ranges in job postings. Employers must also disclose wage information to applicants upon request and provide salary range details to employees transitioning to new roles if they inquire. While distributing job postings is not mandatory, any postings shared must include these required disclosures.
What's Next for Employers?
As Massachusetts joins other states in promoting pay transparency, employers are advised to collaborate with HR experts and legal advisors to adeptly manage these changes. Failing to comply could result in penalties and damage a company's reputation in the ever-transparent job market.
Additional Resources:
Disclaimer: This article is intended for general informational purposes only and is not to be used for legal advice or counsel.
