Trends in Pay Transparency

Several states, including Colorado and Illinois, are requiring employers to provide greater transparency regarding the pay ranges in job postings. These laws, which are aimed at combating gender pay discrimination, have given applicants and existing employees more bargaining power to evaluate job opportunities and their own compensation. Even when not legally required, some employers across the country are making the shift to voluntarily provide more pay transparency.

Pay Transparency Trends

The Society for Human Resource Management (SHRM) recently published a study by consulting firm WTW from 448 surveyed employers, which found that 6 in 10 employers are disclosing job levels to their employees, and almost half of employers are communicating how base salary is determined and progresses.

Regarding pay ranges, 36% of employers disclose individual pay ranges to employees, and 46% of employers are planning to or considering doing so in the future. Indeed.com has stated that it has seen a 137% increase in the last three years of employers deciding to include salary information in job postings.

While some of the statistics may reflect the legal requirement of employers to now disclose pay ranges in job postings, employers are also voluntarily providing or considering providing more information to current employees and applicants.

State Laws Regarding Pay Transparency

Ten states have enacted laws mandating pay transparency, including Washington, California, Colorado, Connecticut, Hawaii, Illinois, Maryland, Nevada, New York, and Rhode Island. For Middle America employers, it’s particularly important to be aware of the Colorado and Illinois requirements.

Colorado: Colorado’s Equal Pay for Equal Work Act requires employers to include compensation in job postings, notify existing employees of promotional opportunities, and keep and maintain job description and wage rate records. Employers must include the hourly or salary compensation or compensation range and a general description of the job’s benefits and other compensation in job postings. This requirement doesn’t apply to jobs that will be performed entirely outside of Colorado or to postings that are entirely outside the state, even if a Colorado applicant applies for the job.

As of the Jan. 1, 2024 amendments, employers must also make reasonable efforts to announce, post, or otherwise make known each job opportunity to all employees on the same calendar day, prior to the date when the employer selects a candidate for the position. The notice must disclose the job’s hourly or salary compensation or compensation range, a general description of the job’s benefits and other compensation, and the date when the application window is expected to close.

Within 30 calendar days after an employee’s start date in a new position, the employer must make reasonable efforts to announce, post, or otherwise make known to employees who are expected to regularly work with the new employee: the name, former title if existing employee, and new job title. The employer also must provide information on how employees can demonstrate an interest in similar job opportunities in the future, including by identifying individuals or departments to whom they can express that interest.

Illinois: As of Jan. 1, 2025, for positions that will be physically performed at least partly in Illinois, or for employees who will report to an office or worksite in Illinois, job postings must disclose the position’s pay scale and benefits. Additionally, if the job has not been formally posted, the employer must disclose the pay scale prior to offering the position, discussing compensation, or at the applicant’s request.

Employer Considerations

Employers with employees in multiple states need to determine whether they may be subject to any state or local pay transparency laws. It’s important to be honest with the pay ranges and not simply include overbroad pay ranges, which may make it difficult for applicants to tell the true range or estimate the potential amount they could receive.

Even when employers are not subject to such legal requirements, they may want to consider whether to make a cultural shift toward pay transparency by including pay ranges in job postings. Employers need to take a holistic approach and consider not only how including pay ranges may affect the applicant pool for job openings, but also consider the effect on existing employees. Employers making the shift should consult and train managers in advance on pay transparency, because including the pay ranges may spark questions and conversations from existing employees who may feel they are not compensated fairly.