What You Need to Know About Pay Transparency

Nov 28, 2023

Applicant Tracking, Blog, HR and Recruiting Industry Information, Recruiting Best Practices

Pay transparency laws are popping up in states and cities throughout the U.S., forcing employers to take a look at their job listings. Find out what you need to know about pay transparency, including what it means and aims to achieve, how to comply with applicable laws, and the tools built into ApplicantStack that support these needs.

What is Pay Transparency?

Pay transparency is a term referring to the disclosure of compensation standards for employees. It may refer to information being shared internally, as well as externally. In recruiting discussions, the concept often comes up when talking about whether salary ranges should be included in listings. But overall, transparency in compensation is a spectrum, so employers often choose just how open they are with what employees can expect in terms of pay.

Pay Transparency vs. Pay Equity

In conversations around pay transparency, the concept of pay equity may come up. The two differ, as pay equity is the concept that those performing equal work deserve equal pay, regardless of the age, gender (or gender identity), race or religion of the individual in the role.

The Equal Pay Act, which went into effect in 1963, legislated the concept of pay equity, yet organizations may still pay different wages for individuals. Pay transparency can serve as a mitigator to unfair compensation practices, as employees have a better idea of what they can expect to be paid in a specific role.

Pay Transparency Laws

In some areas, pay transparency laws are in effect, requiring eligible organizations to disclose how much an employee will be paid in a specific role. Some states have laws requiring the provision of pay ranges for every position posted, while others require pay ranges to be furnished upon request or by a specific point in the interview process.

Although no federal law is currently in place, multiple states have laws focused on pay transparency.

Alabama: An employer may not refuse to interview, promote or hire/employ an applicant based on the individual not providing pay history.
California: Private and public employers may not seek candidate pay history, and employers with 15+ employees must include pay ranges in all job postings.
Colorado: Employers may not seek candidate pay history or use past information to determine wages. Employers must disclose salary or hourly compensation (or a range) and a general description of benefits and other compensation in all job postings.
Connecticut: Employers may not seek candidate pay history and must disclose the pay range for a position upon applicant request or when an offer is extended to an applicant. For internal employees, employers must provide pay ranges upon request or when a change in position occurs.
Delaware: Employers may not seek candidate pay history, although they may confirm the information after extending an offer.
District of Columbia: Government agencies may not seek candidate pay history.
Georgia: City agencies in Atlanta may not seek candidate salary history on an employment application.
Hawaii: Employers may not seek candidate pay history and employers must provide the hourly rate or salary range for advertised positions.
Illinois: Employers may not seek candidate pay history, although they may discuss expectations. Employers with 15+ employees must include pay ranges in all job postings. In Chicago, city departments may not request salary history.
Kentucky: In Louisville, city agencies may not request salary history. No statewide law is in effect.
Louisiana: In New Orleans, city employers may not request salary history or screen applicants based on prior or current pay, benefits or other compensation. No statewide law is in effect.
Maine: Employers may not seek candidate pay history until an offer has been extended.
Maryland: Employers may not seek candidate pay history but can confirm this information voluntarily provided by an applicant after extending an offer. All employers must also provide a pay range to an applicant. Montgomery County further restricts the county government from relying on salary history as a factor in hiring or establishing the pay rate for an applicant.
Massachusetts: Employers may not seek candidate pay history but may confirm the information after an offer has been extended or the applicant provides it voluntarily.
Michigan: State departments may not seek pay history until a conditional offer has been extended.
Mississippi: In Jackson, city agencies may not seek candidate pay history. No statewide law is in effect.
Missouri: In St. Louis, city departments may not seek candidate pay history. In Kansas City, employers with six or more employees may not ask for or rely on salary history when offering employment or determining salary, benefits or other compensation. No statewide law is in effect.
Nevada: Employers may not seek candidate pay history and employers must provide the hourly rate or salary range for advertised positions. They must also provide the pay range for those eligible for promotion or transfer within the organization.
New Jersey: Employers cannot screen applicants based on pay history. In Jersey City, employers with five or more employees must disclose the salary or hourly range and benefits for all job listings and promotion and transfer opportunities.
New York: Employers may not seek candidate pay history, and employers with four or more employees must provide the hourly rate or salary range for advertised positions. Specific counties and cities have additional stipulations in place around these laws.
North Carolina: State agencies may not seek candidate pay history.
Ohio: Employers with 15+ employees in the cities of Cincinnati, Columbus and Toledo may not seek candidate pay history. Those in Cincinnati and Toledo must also share the pay scale for all open positions.
Oregon: Employers may not seek candidate pay history until an offer has been extended.
Pennsylvania: Employers may not seek candidate pay history at any stage during the hiring process. All postings must also clearly disclose pay scale and range.
Rhode Island: Employers may not seek candidate pay history or rely on this information when considering making an offer or determining pay. Employers must provide the pay rate or range to an applicant upon request, as well as to an employee upon request throughout their employment.
South Carolina: In Columbia and Richland County, city and county agencies may not seek candidate pay history. No statewide law is in effect.
Utah: City agencies in Salt Lake City may not seek candidate pay history. No statewide law is in effect.
Vermont: Employers may not seek candidate pay history.
Virginia: State agencies may not seek candidate pay history.
Washington: Employers may not seek candidate pay history. Employers with 15+ employees must disclose the salary range or wage scale and a general description of all other compensation and benefits in every job posting.

The states not on this list do not currently have pay transparency laws in place.

The Benefits of Embracing Pay Transparency

Jobseekers are often looking for transparency to avoid wasting their time applying for positions that don’t align with their financial expectations or needs. Additionally, companies can protect themselves and support their team members by demonstrating a commitment to fair pay practices in all positions. Building trust is another advantage, as an employee is more likely to feel like they can trust an employer with honest and open practices around compensation.

According to an article recently published by SHRM, pay transparency may play a role in reducing employee turnover. The article outlined research performed by Payscale, a compensation software firm based out of Seattle, Washington. This information indicated that the intent to quit declines by 30 percent among employees working for companies that offer pay transparency. Open communication around pay and the potential for growth are essential in demonstrating a forward-thinking and supportive atmosphere, making your company one that jobseekers want to work for.

Using ApplicantStack to Ensure Transparency in Open Positions

With the right hiring and onboarding software, maintaining compliance with pay transparency regulations is easier. ApplicantStack is an excellent tool for businesses of all sizes, offering integrations with top job boards. You can even use the Indeed integration to review salary ranges for similar positions and incorporate pay data into your listing templates. Hire faster and better while building trust and transparency as an employer.