Juggling pay transparency across state lines

Published: December 13, 2024 | Victoria Kelleher, Lead Survey Specialist at Brightmine

As of 2024, 14 states in the US have passed laws to regulate pay transparency. Many of these laws have only materialized within the last few years, and some are still in the pipeline to be implemented. It is likely that pay transparency regulations will soon spread to places where they do not yet apply.

Pay transparency laws typically define requirements for the disclosure of salary ranges to job applicants. Depending on the location of the offense, employers who fail to comply with these regulations can face extensive consequences, from cumulative hefty fines to jail time. Employers must keep up with newly emerging laws if they intend to avoid these consequences.

Pay transparency challenges

It can be a challenge to stay in compliance with pay transparency laws. According to a recent survey from Brightmine, more than half of HR representatives (60%) that operate in states subject to pay transparency laws consider it at least somewhat too complex or difficult to comply with the regulations they must follow.

The most common challenges reported by these respondents included keeping up with changes to the law and determining salary ranges. Some common challenges also emerged when respondents were asked about obstacles they encountered when collecting, storing, or analyzing pay data to support the task of determining pay ranges:

Pay transparency can be particularly complicated for organizations that operate in multiple states. Some of these companies need to contend with different requirements in different jurisdictions, subject to different penalties for noncompliance in each. Among the companies that must juggle different pay transparency laws in two or more states, 90% find it difficult to stay in compliance.

Improving the pay transparency process

Whether or not your company operates in a state that currently has specific pay transparency regulations, it’s important to be vigilant about changes that may be on the horizon. As a relatively new area in employment law, pay transparency regulations are likely to expand to new jurisdictions or be updated in places where they have already taken effect.

A structured approach to monitoring relevant legal updates and an understanding of the steps your organization may need to comply with common requirements of these laws may go a long way to ensure that your company is prepared to meet the challenges associated with legal changes if they arise. Employers may want to consider subscribing to services that will alert HR to legal changes relevant to the company’s areas of operation. This approach can avoid the need to assign an in-house employee to monitor legal changes, which consumes resources and may lead to mistakes.

Employers can also decrease the risk of falling out of compliance by being proactive and adopting common pay transparency practices before they are required by law. Companies that take this approach will get a head start on optimizing practices that may soon become requirements in their state. Going beyond the minimum for compliance can also address some of the obstacles faced by multistate employers. Many of these companies (65%) apply the same standard approach to pay transparency across all the states they operate in, even if some of these states have less stringent requirements.

Companies that are proactive about pay transparency can simultaneously take advantage of the boost certain pay transparency practices confer for talent attraction and the efficiency of recruitment. For example, including salary ranges in job listings increases the probability that job seekers will apply, boosts the efficiency of recruiters by avoiding applications from those seeking higher salaries, and even improves employee retention by demonstrating pay equity. Beyond the avoidance of legal consequences, therefore, pay transparency can also improve the effectiveness of talent acquisition as a whole.