More States Prepare for Pay Transparency

Pay transparency rules have gradually spread and impacted organizations nationwide, with employers adapting their job posting and pay practices to meet requirements and keep up with worker demands.

Pay transparency is when an employer openly communicates pay-related information to current or prospective employees through established practices. Requirements vary by locality, but this information generally includes the pay scales or salary ranges for specific positions. Employers can provide this information through various channels, such as online job sites and postings or during an interview. Employees value pay transparency because it can help them avoid applying for jobs they wouldn’t accept due to low pay, negotiate for better salaries, and build trust with their employers.

Although there is no comprehensive federal pay transparency law in the United States, around a quarter of all U.S. workers are covered under pay transparency laws. The number of employees covered by such laws continues to grow each year. Not all organizations are covered by these rules, but more employers are pursuing transparent job postings to stay ahead of requirements and win over workers. In fact, studies consistently show that workers are more likely to apply for jobs that provide a pay range.

Back in 2021, Colorado was the first jurisdiction to enact pay transparency laws regarding job postings. Since then, over 15 states and localities have enacted their own pay transparency laws, with even more set to go into effect. Most recently, requirements were enacted in the District of Columbia on June 30.

Notably, Illinois has pay transparency rules going into effect on Jan. 1, 2025. Under the law, postings must include the wage or salary range as well as a general description of the benefits and other compensation the employer reasonably expects to offer for the job. These amounts may be set by reference to any applicable pay scale, the previously determined range for the position, the actual range of others currently holding equivalent positions or the budgeted amount for the position. With Illinois having one of the largest populations in the United States, this state law is set to impact a growing number of employers—and add momentum to the practice.

Whether to stay ahead of compliance requirements or keep up with current employment trends, expect more employers to refine their pay transparency practices in the remainder of 2024.

This HR Insights is not intended to be exhaustive nor should any discussion or opinions be construed as professional advice. © 2024 Zywave, Inc. All rights reserved.