The state of pay transparency: Impacts and strategies for employers | Baker Tilly
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The state of pay transparency: Impacts and strategies for employers
Dec. 8, 2025 · Authored by Deanna Kempinski
Pay transparency has been and continues to be a hot topic for human resources (HR) professionals. While the regulations vary by state, full compliance requires impacted employers to carefully review their talent management and compensation administration strategies.
Many states have already enacted pay transparency legislation while others have regulatory bills in the pipeline. It is important for HR professionals to be familiar with and understand the regulations that impact HR operations in the states within their footprint and monitor pending legislation in the states that could become part of their footprint in the future.
The implications of pay transparency regulations go beyond simply including a salary range in a job posting for an open position. If not handled appropriately, the communication of salary ranges through recruitment efforts can negatively affect employee morale and question your compensation strategy. HR professionals must be thoughtful and deliberate with employee compensation and develop an effective communication plan to deal with questions and concerns from current and prospective employees.
The evolving landscape of pay transparency laws
Currently, there are 15 states with pay transparency laws in effect in the U.S. While the laws have similar requirements, there are also regulatory differences by state. Some laws require employers to post wage information in their job postings, such as a salary range and other forms of compensation and benefits. Other laws require employers to disclose wage information during the recruitment process, while others only require disclosure if an applicant or employee requests the information.
Key regulatory requirements and upcoming legislation
The most common requirement of state pay transparency legislation is for employers to disclose salary ranges and/or wage scales to both internal and external job applicants in all company sponsored job postings.
Some states require employers to include general benefit descriptions in all job postings.
Massachusetts is the state to most recently enact pay transparency legislation. The legislation requires employers with 25 or more employees to disclose the pay range for all job postings.
Delaware plans to enact pay transparency legislation in July 2026. The legislation will require all employers with eleven (11) or more employees to disclose salary or wage ranges in all job postings for both internal and external job advertisements.
There are currently six (6) localities with local pay transparency ordinances: Cincinnati, OH, Toledo, OH, Jersey City, NJ, Ithaca, NY, New York City, NY, and Westchester County, NY.
Several other states including Alaska, Kentucky, Maine, Michigan, Missouri, Montana, Oregon. South Dakota, Virginia, and West Virginia are considering pay transparency legislation, but no laws have been passed.
Internal challenges for employers
Even if your company is not based in a state with pay transparency regulations, you may still have to contend with the requirements of other states. Compliance is dependent on where you are hiring, not necessarily where your business is headquartered. That means, if you are hiring an employee for a remote position in Massachusetts, their pay transparency requirements would apply even though you are headquartered in Wisconsin, which does not currently have legislation in effect.
Pay transparency legislation also forces employers to consider their overall compensation philosophy and administrative processes, specifically how transparent they must be with employees versus how transparent they are willing to be.
For instance, if an employer publishes a position with a salary range per their state’s requirements, but current employees in the same position aren’t being paid within that range and find out after seeing the job posting, the employer will likely face challenges with employee morale and potentially concerns over internal equity.
On the other hand, simply adjusting current employee pay to fall within the posted salary range can create an entirely distinct set of issues by eliminating differences in compensation that have developed based upon performance and/or time with the company. Employers need to carefully balance pay transparency requirements with internal equity and the need to be market competitive.
When situations like those described above occur, managers, supervisors, and HR professionals must be prepared to give clear and consistent answers to employees about their pay and how compensation is managed at the company. If there is no clear strategy, employees are likely to be upset and confused. If they are not provided with accurate information, they will make their own assumptions, often based on misinformation. An employee’s dissatisfaction with their pay and/or how they believe the company is managing their pay, can lead to turnover and the potential loss of key employees.
Compensation strategy and communication
Regardless of pay transparency obligations in your state, we recommend that employers take the time to develop a comprehensive compensation philosophy and strategy. The philosophy should be memorialized in a document that outlines your organization’s approach to compensation. It should provide direction and clarity on how compensation decisions are made, ensure consistency in pay practices, and align with the organization’s values and market pay expectations. It does not have to be fancy or complex but rather provide employees with the framework for how their work may be rewarded.
Compensation strategies can include the use of market data and/or the establishment of salary ranges used to make consistent, equitable pay decisions at the time of hire, when considering promotions, and help the organization remain competitive in a marketplace that can be dynamic as the demand for certain positions fluctuates. Establishing a well-defined framework in advance of having to make compensation decisions simplifies overall administration and helps you comply with any applicable pay transparency requirements.
Compensation benchmarking studies are also used by employers to “test” their compensation, benefits and total rewards practices against industry standards and/or competitors to determine whether their pay is competitive and following best practices. These studies can be conducted internally or by a third-party and can include a review of all company positions or simply a study of key positions in response to hiring needs, turnover concerns, or other employee-related issues.
A compensation benchmarking study must begin with the selection of the most applicable compensable factors. Your goal should be to establish “apples-to-apples" comparisons of your positions using accurate job matches based on responsibilities and not just position title. Be sure to choose the right geography, the right number of employees, the right revenue number, and right industry, etc. for your company. Remember, a position you have determined to be a director could be considered a supervisor by another organization. Laying a solid foundation for the study is critical and getting alignment on those compensable factors from your key stakeholders is key to success. Taking the time to complete these steps up front will lead to a high degree of confidence in the results of the study and your ability to use the data to make critical compensation decisions for your business.
Staying informed and compliant
Fortunately for employers, there are numerous resources that can be used to track regulatory changes and requirements across the U.S. From HR organization newsletters to your legal counsel or government publications, finding and tracking regulatory updates is relatively easy. There are even more comprehensive tools, like the Employer State Compliance Roadmap, that house each state’s payroll and HR information in an easy-to-use, searchable database. Additionally, the tool allows employers to compare certain requirements between states.
External HR consultants can also provide their expertise in interpreting regulatory requirements, understanding the responsibilities of internal HR, and implementing best practices for benchmarking studies and overall compensation strategy.
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