In American culture and social settings, it’s long been taboo to discuss one’s salary. Sharing that information around those who earn more can make the lower earner feel inferior. Sharing with those who earn less can feel like gloating. More broadly, most people feel it isn’t anyone else’s business how much they make.
But things are different when it comes to the workplace.
Salary Standings Are a Practical Concern
Sure, many would still find it unseemly to ask a colleague how much they make, but those same people would likely be interested to know how their pay stacks up against those of their similarly situated peers. Nobody wants to wonder if they’re being underpaid by an employer. And when it comes to applying to jobs, applicants understandably want to know what the position pays to know whether the position is worth their time and effort to submit an application.
Lawmakers have often sided with employees and applicants in this regard. In fact, pay transparency has become a mandate across much of the United States, requiring organizations to make changes in both their pay practices and how they communicate when recruiting new staff. Currently, 13 states, the District of Columbia and many cities have enacted some form of pay transparency requirement, with several others considering such laws.
Pay Transparency Becoming a Legal Mandate
These requirements vary by jurisdiction. In California, for example, employers are required to share the pay range for all posted jobs—and the pay range for an existing employee’s position. In Connecticut, employers need to provide pay range information on request or prior to making a job offer, but there’s no transparency rule for existing employees with respect to their current position.
This patchwork system of requirements, combined with the burden of complying with transparency requirements more generally, creates burdens on employers but provides valuable insights for employees and applicants.
We reached out to employers and industry experts to get a sense of the challenges they’ve faced with pay transparency laws and strategies they’ve taken to ensure a workable compliance program.
Ensuring Compliance
The most obvious impact to employers of pay transparency laws is the need to comply with these laws. This isn’t necessarily a major challenge in and of itself, but it does require ensuring postings are carefully reviewed to satisfy legal requirements.
“Organizations should make sure that job postings have the information required by law, which can vary among different states and locations,” says Maura McLaughlin, partner at Boston labor and employment law firm Morgan, Brown & Joy.
“Some state laws require employers to post only the salary or hourly wage rate for a position; other jurisdictions may require including information on benefits or total compensation packages such as stock options or incentive compensation,” she says. “Employers should make sure any posting forms or templates they use are structured to capture the necessary information and ensure that any third parties involved in their recruiting and hiring (such as recruiters and third-party job posting sites or boards) are aware of the need for compliance about disclosures.”
Race to the Top
With the explosion of remote work, many organizations cast a broad net when hiring for certain roles, and organizations may have physical offices in multiple states. Creating job postings can be tricky when dealing with a patchwork of requirements, and data suggests that many companies are simply providing pay transparency in job postings as a general practice rather than trying to tailor postings to the requirements of multiple specific jurisdictions.
“Our ongoing analysis of workforce and job posting data has revealed a decline in the use of non-transparent terms like ‘competitive salary’ during the recruitment process,” says Elin Thomasian, SVP of Workforce Strategy and Consulting at TalentNeuron. “In the US, from August 2023 to August 2024, there was a 16% drop in these vague descriptors, with the number of job postings across the country using such language falling from 138,521 to 116,628,” Thomasian says.
The practice of sharing salary ranges in job descriptions is definitely on the rise both because of mandated pay transparency and the recognition that clear compensation communication is important in talent acquisition.
“By offering transparent salary ranges upfront, employers not only comply with emerging regulations but also build trust with candidates, creating a more engaged and informed talent pool,” Thomasian says.
Breaking Down a Long-Standing Stigma
As noted earlier, most Americans don’t like to talk about how much they make. That taboo has traditionally been reinforced by employers who subtly discourage discussion of pay with colleagues. But it’s a taboo that has been dealt a serious blow by the growth in pay transparency laws.
“In the past, employers may not have voluntarily embraced this practice as part of their culture, as they were hesitant to provide insight into the compensation of individual employees or job seekers,” says Cara Zibbell, Vice President of People and Engagement at Atrium.
Now, though, because of the impact of new laws, “the numbers are there for all to see, including current employees, creating a lot of water cooler talk, or even further resignations,” Zibbell says. “While up to this point, employees should not have been prohibited from talking about their pay (in compliance with the NLRA), many employers and employees still felt that compensation was a taboo topic. This stigma provided an organic insurance policy from this type of chatter.”
Building Trust?
While it may seem a bit insincere for a company to tout its legally required pay transparency policy as a sign of the company’s openness, some employers do feel that in embracing this required openness, they are better able to start off on a good foot with job candidates.
“One of the biggest hurdles we faced was helping clients understand that transparency doesn’t dilute their negotiating power; rather, it builds trust with potential hires,” argues Amit Doshi, founder and CEO of recruitment platform MyTurn. “It was essential to engage in conversations with hiring managers and stakeholders, highlighting how transparent pay practices can enhance the talent acquisition process. Candidates today are increasingly looking for companies that value fairness and equity, so adjusting our messaging around pay became crucial.”
Pay transparency laws are reshaping the employment landscape, forcing organizations to rethink their pay practices and communication strategies. While compliance with varying state regulations poses challenges for employers, it also promotes fairness and trust in the hiring process.
As companies adapt to these new norms, employees and job seekers alike gain access to crucial compensation information, breaking down long-standing taboos around discussing pay. Ultimately, pay transparency can foster a more equitable workplace, benefiting both employees and employers by building trust and encouraging more informed job negotiations.
Lin Grensing-Pophal is a Contributing Editor at HR Daily Advisor.