2026: A New Era of Pay Transparency - By Owen Chung & Leen Osman

Historically, American employers have had major leverage over employees when it came to discussions about salary and compensation. Being gatekeepers of information, employers are significantly more knowledgeable about the market rates, their budget limits, and internal pay bands, while candidates and current employees are left to only estimate what a “reasonable” request is. 

In response to this dilemma, many states have decided to take the first steps forward to level the playing field, but as we will soon see, pay transparency is more than just the disclosure of pay bands. The new legal standard across a growing number of states requires a full breakdown of bonuses, stock options, and benefits. Moreover, new laws have important implications for the future of workplace culture and human resource departments. 

What is Pay Transparency and Why Does it Matter?

Pay transparency is more complicated than just giving employees leverage to negotiate. It is a structural tool designed to dismantle historical racial and gender wage gaps. Recent data from the U.S. Census Bureau highlights exactly why these laws are gaining momentum: women working full-time, year-round currently earn an average of 81 cents for every dollar paid to men. When broken down by race, the gap widens significantly. Black women earn approximately 65 cents, and Latina women earn just 58 cents for every dollar paid to the highest income earners, white, non-Hispanic men.

By prohibiting employers from asking for previous salary history and obligating them to communicate potential salaries upfront, transparency laws lift the veil on compensation, motivating workers to advocate for themselves while promoting long-term staff retention.

The Legislative Landscape

Out of 50 states, 18 have introduced or enacted state laws calling for full compensation transparency. On a federal level, the Salary Transparency Act introduced in 2023 ultimately did not pass, meaning compliance remains a state-by-state patchwork. Thus, it is more important than ever for employers to note the standards of disclosure each state has set.

Here is a breakdown of the states leading the charge (2025 Pay Transparency Laws by State:

California:

• SB-1162 (Enacted Jan 1, 2023) – Employers with 15+ staff (and their third parties) must include pay scales in all job postings.

• SB 642 (Enacted Jan 1, 2026) – Requires good faith pay scales upon request; bans using or seeking salary history; requires 3-year record retention.

Colorado:

• Equal Pay for Equal Work Act (Enacted Jan 1, 2021) – Requires pay transparency in all job postings; prohibits requesting salary history or retaliating against disclosure.

Connecticut:

• Public Act No. 21-30 (Enacted Oct 1, 2021) – Protects coworker salary discussions; requires wage ranges upon applicant request.

Delaware:

• House Bill 105 (Enacted Sep 26, 2027) – Requires employers to include salary ranges and all compensation benefits in job postings.

Hawaii:

• Act 203 (Enacted Jan 1, 2024) – Employers with 50+ staff must include hourly rate or salary range for specific listings.

Illinois:

• House Bill 3129 (Enacted Jan 1, 2025) – Employers with 15+ staff must include pay scales in any job listing.

Maryland:

• Equal Pay for Equal Work Act (Enacted Oct 1, 2020) – Prohibits refusing to hire based on salary history refusal; prohibits sex-based pay favoritism.

Massachusetts:

• Frances Perkins Act (Enacted Jul 31, 2025) – Employers with 25+ staff must reveal wage or salary ranges when hiring.

Minnesota:

• Statute 181.173 (Enacted Jan 1, 2025) – Employers with 30+ staff must disclose minimum and maximum salary ranges and all benefits in postings.

Nevada:

• SB 293 (Enacted Oct 1, 2021) – Prohibits requiring salary history; mandates disclosing salary ranges to candidates.

New Jersey:

• Bill S2310 (Enacted Jan 1, 2024) – Employers with 10+ staff must post hourly wage or salary and first-year benefits.

New York:

• Labor Law Section 194-B (Enacted Sep 17, 2023) – Businesses with 4+ employees must list compensation for jobs, transfers, and promotions.

Oregon:

• Senate Bill 906 (Enacted Jan 1, 2026) – Details pending based on localized implementation.

Rhode Island:

• Pay Equity Act (Enacted Jan 1, 2023) – Prohibits pay differentiation based on protected classes; bans salary history questions; requires ranges upon request or transfer.

Vermont:

• Act 155 (H.704) (Enacted Jul 1, 2025) – Employers with 5+ staff must include compensation ranges in all written job advertisements.

Washington:

• Equal Pay and Opportunities Act (Enacted Jan 1, 2023) – Protects wage discussions; bans wage NDAs; employers with 15+ staff must provide ranges for transfers and promotions.

Washington, D.C.:

• Wage Transparency Omnibus Act (Enacted Mar 5, 2024) – Private employers with 25+ staff must disclose benefits and pay ranges to candidates.

The Remote Work Dilemma

For employers looking to hire workers remotely outside of the state where their company is based, state borders complicate compliance for remote work. If an organization operates out of Arizona but hires a remote employee based in California, are they held to California's transparency laws? Surprisingly, the answer is yes. If a company promotes their jobs in California, Californian applicants and hires are entitled to the SB 642 protections regarding good faith pay estimates, regardless of where the company is headquartered. Employers must check the specific jurisdictional rules for every state where their remote employees reside.

Pay Transparency and Implications for Employers

This new level of visibility comes with its own advantages and host of drawbacks. In many states, companies now have to provide a realistic, good faith estimate when they hire someone. 

Advantages for Employers:

• Retention and Trust: Employees may have increased retention when employers are transparent about their compensation and future earning potential.

• Targeted Talent Pools: Applicants can self-select based on the posted ranges, ensuring you attract candidates whose expectations align with your budget. 

In many states, large salary ranges (i.e. $50k to $250k) are no longer permitted. When companies publish competitive, good faith external ranges to attract top talent, long-term (i.e. more senior) employees may realize their pay is at the bottom of those new bands. Current employees gain real-time visibility into their peers’ earnings potential, which can lead to new salary negotiations and alignment. Transparency can lead to greater employee relations, trust in management, sustained productivity, and employee retention. 

Actionable Steps for Employers

The biggest priority for employers is to ensure their hiring practices comply with the laws where they source and recruit talent. To reduce future troubles, employers can first create a base compensation model with potential raises clearly listed, and to list all required qualifications on internal and external job postings. 

To successfully implement pay transparency, employers should begin by auditing and standardizing their compensation structures. Creating a clear base model that maps out potential raises and includes regular pay equity audits. Once this foundation is set, it is essential to train management on how to effectively communicate these compensation philosophies and facilitate open salary discussions. Furthermore, leadership must communicate proactively internally, addressing the shift toward transparency with tenured employees. Finally, partnering with local career centers allows employers to accurately benchmark salary ranges based on current candidate experience and ensures that required qualifications are clearly outlined on all internal and external job postings. If the pattern of pay transparency legislation continues, it is likely that more states will adopt legislation changing the hiring practices for employers. Employers who future proof their compensation strategies today will find themselves well-prepared to navigate this shifting legal landscape without fundamentally changing their practices. 

About the Authors

Owen Chung

Owen is pursuing a Bachelor’s degree in Political Science at the University of California, San Diego. His academic and professional interests focus on corporate law, legislative research, and the analysis of legal and regulatory frameworks shaping public policy.

Leen Osman

Leen Osman, previous government relations associate at American Association for Employer Relations +. Currently a freshman pursuing an undergraduate degree in International Relations at Arizona State University. She is passionate about international affairs, law & diplomacy and governmental affairs, while also advancing her foreign languages skills.

References

2025 Pay Transparency Laws by State | Paycor. (2025, April 7). Paycor. https://www.paycor.com/resource-center/articles/pay-transparency-laws-by-state/