Historically, businesses have discouraged employees from discussing compensation, making the topic feel off-limits. While companies may still try to discourage these conversations, it’s legal for employees to share salary information under the National Labor Relations Act (NLRA). The NLRA protects employees’ rights to discuss wages and working conditions as part of collective bargaining efforts. Despite this, many organizations rely on a culture of secrecy to maintain control over compensation decisions.
This secrecy often benefits employers. Current employees might ask for a raise—or look for a new job—if they knew they were being underpaid. New hires would be better equipped to negotiate if pay ranges were public. Employers, however, know what they’re willing to offer, and often base offers on a candidate’s previous salary rather than the market value of the role.
Some even required proof of past pay (like a W-2 or pay stub). That practice allowed them to offer only marginal increases instead of aligning pay with equitable compensation practices. By keeping salaries confidential, businesses have traditionally held all the bargaining power.
This imbalance of information has traditionally put job seekers and employees at a disadvantage, especially women and people from historically marginalized groups, who have been disproportionately affected by pay gaps.
Salary transparency laws help expose these disparities and encourage equitable pay by requiring companies to disclose salary ranges upfront.1 This gives workers the tools they need to assess value, address pay inequities and negotiate fair, competitive compensation.
Why salary transparency matters
A lack of salary transparency keeps underpaid individuals underpaid, often throughout their careers. Over time, this perpetuates inequity and reinforces existing wage gaps. Salary transparency has emerged as a solution to this issue.
How pay transparency laws help address wage gaps
In recent years, several states have passed pay transparency laws requiring employers to disclose salary ranges in job postings and prohibiting them from asking about an applicant’s salary history. These measures help level the playing field and reduce pay disparities by ensuring salaries are based on the value of the role rather than past compensation or unconscious bias.
A real-world example of why pay transparency matters
Here’s an example of several posts that have gone viral in recent years.
“My company just listed on LinkedIn® a job posting for what I’m currently doing… and now, thanks to salary transparency laws, I see that they intend to pay this person $32K to $90K more than they currently pay me. So I applied.”
This scenario demonstrates how pay transparency policies empower workers. In the past, this employee would have had no way of knowing they were being underpaid. With greater visibility, workers can now identify discrepancies and advocate for fair compensation.
How salary history questions perpetuate wage gaps
Before pay transparency laws, employers often asked job applicants about their previous salary. This practice reinforced wage inequality by allowing past underpayment to follow candidates into new roles. Instead of aligning compensation with the current market value of the position, employers could offer just slightly more than a candidate’s previous pay, regardless of qualifications or responsibilities.
Why salary transparency helps level the playing field
By prohibiting salary history questions, transparency laws have shifted hiring practices. Employers are now expected to base offers on the value of the role, not a candidate’s prior earnings. This helps break the cycle of pay inequity and ensures that compensation better reflects experience, skills, and job expectations.
A time-saving tool for job seekers
Salary transparency also makes the hiring process more efficient for job seekers. Interviews and assessments take time, and knowing the salary range upfront allows candidates to decide whether the role aligns with their expectations before investing that time.
How unions model pay transparency in the workplace
Unions have long demonstrated the power of pay transparency. In unionized organizations, salary ranges are typically standardized and publicly available, making it easier for employees to understand their pay scale and advocate for fair wages.
Because union contracts outline specific compensation based on role and experience, there’s less room for subjective or biased pay decisions. This transparency helps ensure that employees with similar responsibilities are compensated fairly. As a result, unionized workers often receive higher wages and better benefits than non-unionized workers in similar roles.
Applying union transparency principles more broadly
Transparent pay practices in union settings reduce uncertainty and build trust between employers and employees. They also create a more structured and predictable path for wage increases and career advancement.
By applying similar principles in non-unionized workplaces, pay transparency laws can extend those benefits to non-unionized places to support equitable compensation practices across industries.
The benefits of salary transparency
Salary transparency creates a more equitable and efficient labor market. For employees and job seekers, the benefits are clear.
Fair pay for equal work
Transparency helps ensure that compensation is based on the value of the role and the employee’s skills rather than prior earnings or negotiation skills.
Stronger negotiating Power
Employees who know the market value of their role are better positioned to negotiate competitive compensation.
Increased trust in the workplace
When companies are open about pay, employees are more likely to feel valued and respected, leading to higher job satisfaction and lower turnover.
Time savings during the job search
Knowing the salary range upfront allows candidates to decide whether to pursue an opportunity, saving time for both job seekers and employers.
Why salary transparency benefits employers, too
Salary transparency isn’t just helpful for employees. Companies that are upfront about compensation are more likely to attract candidates whose expectations align with the role. This reduces the risk of losing candidates late in the process due to misaligned salary expectations.
Transparent pay practices can also promote internal pay equity. Employees who understand how compensation decisions are made—and feel they are being paid fairly—are more likely to stay with the company and perform at a higher level.
Challenges for employers navigating salary transparency
While salary transparency benefits employees, it presents certain challenges for employers. One of the biggest concerns is the potential for employee dissatisfaction when they discover pay discrepancies between themselves and colleagues. If employees see that others in similar roles are making more money, they may demand raises, leading to increased labor costs.
Inconsistent pay structures can cause issues
Employers may also struggle to justify differences in compensation if they haven’t maintained consistent pay structures. Companies that have historically relied on subjective or inconsistent pay decisions may face backlash when transparency exposes these inconsistencies.
Competitors may use salary data to poach talent
Public salary ranges can also make it more difficult for companies to attract top talent without raising pay across the board. Competitors may use that information to lure candidates by offering slightly higher salaries.
Clear pay policies can reduce risk
However, these challenges are not insurmountable. Employers who implement transparent pay practices and communicate the rationale behind compensation decisions can build trust and reduce friction. A well-defined compensation strategy helps create a workplace built on fairness and consistency.
Salary transparency is about equity and trust. Employees deserve to know the value of their work, and businesses that recognize and reward that value will thrive in the long run. Transparency laws are beginning to level the playing field, giving employees the tools they need to advocate for fair compensation.
Salary transparency state law examples3
As of March 2025, several U.S. states and municipalities have enacted salary transparency laws to promote equitable pay practices.3 These laws vary in scope and requirements but generally mandate that employers disclose salary ranges in job postings or upon request. Notable examples include:
California
California's pay transparency law, Senate Bill (SB) 1162, went into effect on January 1, 2023. It requires employers with 15 or more employees to disclose pay scales to job applicants and current employees.
Colorado
Colorado’s Equal Pay for Equal Work Act mandates that employers include pay ranges and a description of benefits in all job postings, including internal promotions and transfers.
Connecticut
Public Act 21-30 went into effect on October 1, 2021, requiring employers to disclose salary ranges to applicants and employees upon request.
Hawaii
As of January 1, 2024, Hawaii's pay transparency law requires employers with 50 or more employees to include a salary range or hourly rate in job postings.
Illinois
Effective January 1, 2025, Illinois law mandates that employers with 15 or more employees provide salary ranges and benefits in all job postings.
Maryland
On April 25, 2024, Maryland passed a law requiring all employers—including third-party recruiters—to include wage ranges and benefit information in internal and external job postings.
Massachusetts
Enacted in July 2024, this law requires businesses with more than 24 employees to share salary ranges, with larger employers (100+ employees) required to report compensation data as well.
Nevada
Nevada's Senate Bill 293, effective October 1, 2021, requires employers to disclose salary ranges to job applicants after interviews and to employees pursuing promotions. It also bans asking for an applicant’s salary history.
New York
As of September 17, 2023, Labor Law Section 194-B requires employers with four or more employees to list compensation ranges and job descriptions for open roles, promotions, and transfers.
Rhode Island
This law requires employers to disclose salary ranges to current and prospective employees and prohibits inquiries into an applicant's previous salary.
Washington
Since January 1, 2023, employers must include salary ranges and a general description of benefits in all job postings.
Additional city laws
Several cities have also adopted pay transparency requirements, including New York City, Cincinnati and Toledo.
What is pay transparency for HR professionals?
Pay transparency laws represent one of many things HR professionals need to be aware of and explain to their organizations. While it may not seem glamorous, representing the laws and best practices in pay inside a company makes a huge difference for its success and the happiness of employees.
If you're passionate about building fair and transparent workplaces, a career in organizational leadership could be the right next step. Learn more about what you can do by checking out 4 Organizational Leadership Careers for Ambitious Career Advancers.
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1Jantz, Jordan Pay Transparency Laws: What HR Pros Need to Know (2022). https://www.rasmussen.edu/degrees/business/blog/pay-transparency-laws/
2Jeanne Sahadi, More states now have pay transparency laws. Here’s the effect they’re having (Nov, 2024). CNN https://www.cnn.com/2024/11/13/business/pay-transparency-laws-by-states/index.html
3Quick Facts About State Salary Range Transparency Laws, (March, 2023) The Center for American Progress, https://www.americanprogress.org/article/quick-facts-about-state-salary-range-transparency-l
