TL;DR intro
- Vermont's Pay Transparency Law:Vermont has passed a pay transparency law requiring employers to publicize salary ranges, effective July 1, 2025.
- Impact by 2025:By 2025, approximately 1 in 3 workers in the U.S. will be impacted by pay transparency laws.
- Aims of Pay Transparency Laws:Pay transparency laws aim to close wage gaps and boost hiring, with proponents citing benefits such as closing racial and gender wage gaps.
Vermont is the latest state to pass a pay transparency law, joining a growing list of states, counties, and cities requiring employers to publicize their salary ranges to job candidates. This move is part of a broader trend aimed at promoting wage equality and transparency in the job market.
New Pay Transparency Laws
The Vermont law, set to take effect on July 1, 2025, is among several recent legislative updates that will soon entitle workers to know pay ranges. Other regions with upcoming pay transparency laws include:
- Washington, D.C.: Effective June 30, 2024
- Maryland: Effective October 1, 2024
- Illinois: Effective January 1, 2025
- Minnesota: Effective January 1, 2025
According to Lulu Seikaly, senior employment counsel at Payscale, an estimated 1 in 3 workers in the U.S. will be affected by pay transparency laws by 2025.
Requirements and Impact
Pay transparency laws vary by state but generally require employers to list their intended pay range for a role on any publicized job description. These laws apply to workers in California, Colorado, Hawaii, Illinois, Minnesota, New York, New Jersey, Vermont, Washington, and Washington, D.C.
Other laws mandate that job seekers are entitled to know the pay range at certain points during the hiring process, such as during the first interview or upon receiving an offer. In some cases, candidates can request this information, while in others, hiring managers must proactively provide it. States enforcing these types of laws include Connecticut, Maryland, Nevada, Ohio (Cincinnati and Toledo), and Rhode Island.
Legislative Momentum
Additional states, including Maine, Massachusetts, Michigan, New Jersey, and Pennsylvania, have proposed pay transparency bills that could advance before the year's end. Seikaly notes that while 2022 was dubbed the "year of pay transparency," 2024 is seeing even more legislative activity.
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Federal Pay Transparency Efforts
A federal pay transparency bill has also been introduced, though it is currently pending in the House of Representatives. Seikaly points out that the bill's chances of passing this year are slim due to the current Republican control of the House. However, the prospects for a national pay transparency law could improve if Democrats gain control of the U.S. House of Representatives, Senate, and the White House.
Benefits of Pay Transparency
Proponents of pay transparency laws argue that such measures can close racial and gender wage gaps and boost hiring. For example, the gender wage gap among federal workers, whose salaries are publicly listed, was about 6% in 2022, compared to 16% nationally. In Colorado, the first state to pass a pay transparency law in 2019, publicized salaries increased by about 3.6% after the law took effect, suggesting that greater transparency gave workers more leverage in pay negotiations.
A majority of workers support transparent pay policies, with 58% preferring job postings that include a pay range, according to a September 2023 survey by the National Women's Law Center (NWLC) and Morning Consult. Additionally, 60% of respondents support implementing pay range transparency practices in their workplace.
Broader Implications
The impact of pay transparency laws extends beyond the states that pass them. Companies operating in multiple states are increasingly adopting transparent pay policies across all locations, even if not legally required. This trend is particularly evident among businesses with offices in regions like New York City, where pay transparency laws are already in effect.
Joy Rosenquist, a shareholder at labor and employment law firm Littler, notes that companies that disclose more information than required tend to gain more trust from candidates and employees. This transparency can serve as a valuable retention and recruitment tool.
As more states enact similar laws, the push for a federal pay transparency bill continues. These efforts aim to close wage gaps, boost hiring, and foster trust between employers and employees, ultimately contributing to a fairer and more transparent job market.
