Pay Transparency Laws Are Here—Is Your Business Ready?

Posted on June 4, 2025

Over the last few years, a wave of pay transparency legislation has swept across the U.S., changing how organizations attract talent, manage compensation, and maintain compliance. From California to New York, states and cities are legally requiring employers to post salary ranges in job ads, disclose pay ranges internally, or respond to employee inquiries about pay—and the trend is spreading fast.

While the intent is to close wage gaps and promote fairness, many employers are still catching up. And the risks of getting it wrong go far beyond a fine. Let’s break down what’s happening, and how businesses—especially small and mid-sized ones—can prepare.

What Are Pay Transparency Laws?

Pay transparency laws vary by jurisdiction, but most include one or more of the following requirements:

• Salary ranges must be included in all job postings and ads
• Pay scales must be provided to current employees upon request
• Companies must maintain records of pay ranges and promotional opportunities
• Some laws prohibit retaliation against employees who discuss pay - as part of the broader pay equity laws

States like California, Colorado, Connecticut, Hawaii, Maryland, Massachusetts, Nevada, New York, Illinois, and Washington have already enacted specific pay transparency laws, with others closely watching. Some apply only to employers with a certain number of employees, but others are broader—and remote work is blurring the lines even further.

What Happens If You're Not Compliant?

Fines and penalties are one part of the risk. In some cases, employers are fined $5k per job ad that is posted without a salary range, with no warning. But the bigger cost may be reputational:

• Public backlash from vague or misleading job ads
• Lawsuits from employees discovering long-standing pay inequities
• Loss of trust internally if ranges don’t align with actual pay practices

Worse, the moment you post one job with a salary range, your entire workforce may start asking, "Why don’t I make that?" This can open a larger can of worms reading your internal compensation policy.

How Pay Transparency Affects Your Business (Beyond Compliance)

1. Your Compensation Strategy Will Be Exposed
No more vague “market rate” language. If your pay bands are inconsistent or outdated, now’s the time to fix them. Otherwise, you may struggle to explain your decisions.

2. Recruitment Is Now a Public Negotiation
Candidates are comparing ranges across companies before applying. A too-broad range looks evasive. A too-low range turns people off. And if your posted range isn’t what you’re truly willing to pay, you’re wasting everyone’s time.

3. Internal Equity Questions Will Surface
Transparency forces companies to confront hidden inequities across gender, race, tenure, or department. That’s a good thing—but it takes readiness, sensitivity, and sometimes tough conversations.

4. Managers Need Talking Points
Your leaders must be trained to discuss compensation in a way that’s honest, defensible, and aligned with company policy. Avoiding the topic is no longer an option.

How To Prepare Your Organization

Whether you operate in states that have pay transparency or pay equity laws or not, it’s smart to future-proof your compensation practices:

• Make sure your job descriptions are updated annually
• Conduct an annual compensation benchmarking study to compare your current pay rates with the market rates that are paid for the same duties and qualifications
• Audit your current pay structure for internal and external equity including gender and ethnicity
• Define clear salary bands for all positions and keep them updated
• Document your compensation philosophy and how you make decisions
• Train HR and hiring managers to discuss pay confidently and fairly
• Align your job postings with your internal pay structure
• Have a communication plan for current employees

Final Thought: Transparency Builds Trust - If Done Right

Pay transparency can feel like a compliance burden, but it’s also a huge opportunity to build trust and show that your organization values fairness and equity. It forces businesses to be more intentional, more consistent, and ultimately more attractive to today’s workforce. It also helps with budget planning and forecasting.

If you need assistance or guidance with any of these tasks, please contact us at ANOVA Resources. We help companies develop compensation frameworks that are competitive, legally compliant, and tailored to your business size and goals. Whether you need a compensation audit, manager training, or help rewriting job ads—we’re here to support you.