New state pay transparency laws are taking effect across the US, increasing compliance requirements and holding employers more accountable for their pay practices.
Key takeaways
- As of November 2025, 15 US states will have pay transparency laws, with Vermont’s being the fourth to take effect this year as of 1 July 2025
- Pay transparency laws differ across states, with varying definitions, penalties, and posting requirements creating challenges for multi-state and remote employers
- Businesses should conduct internal pay equity audits and train their HR staff and managers to ensure compliance
Shutterstock.com/pogonici
An increasing number of US states are enacting pay transparency laws designed to promote pay equity and close wage gaps. By November 2025, 15 US states (and Washington DC) will have pay transparency laws on the books; legislation in Illinois, Minnesota, and New Jersey have already taken effect this year, with Vermont joining the lineup as of 1 July 2025.
Vermont H 704 requires employers with five or more employees to disclose the compensation or range of compensation in job postings for internal and external positions. The law applies to job postings for hybrid and in-person roles, as well as remote positions for which employees “will predominantly perform work for an office or work location that is physically located in Vermont.”
Among other things, H 704 requires job postings for tipped positions to state that the job is tip-based and include the base wage or wage range. Employers must also include information about benefits or discretionary compensation that candidates may be eligible for upon hiring. The law does not create a private right of action, but employers may face civil penalties for any violations.
Massachusetts will follow Vermont, with its pay transparency law taking effect on 29 October 2025.
“No two pay transparency laws are alike”
Laura Mitchell, principal at Jackson Lewis, said the “roll out” of pay transparency laws was set off by salary history bans. She said the bans were meant to “cut off the forward perpetuation of potentially unequal pay,” and that pay transparency laws are the next step in doing so.
“The impetus of [pay transparency laws] was primarily that the pay gap between what women were making on average as compared to men really wasn’t changing and had instead been stagnant for decades. . . laws like the [Equal Pay Act 1963] weren’t really moving the needle, and we weren’t seeing any federal legislation,” Mitchell said. “So the states really kind of picked up the mantle and said, ‘we’ve got to do something else, because just pure non-discrimination isn’t cutting it.’”
Though many states are aligned on advancing pay equity, “no two pay transparency laws are alike,” Mitchell said. The result is a patchwork of legislation that has increased administrative and compliance burdens for many employers.
The spectrum of pay transparency laws is vast, with some states placing considerable restrictions on employers whilst others are more permissive. For example, Colorado – which some consider as having the most stringent pay transparency law – requires employers to include salary ranges and a general description of benefits in job postings, and mandates that businesses notify employees of promotional opportunities and hiring decisions. Other states, like Connecticut and Nevada, simply require employers to disclose salary ranges to applicants following interviews.
Colorado was the first state to “really pull back the curtain on pay,” Mitchell said. She said many employers “initially gave a second thought to whether or not they should hire a Colorado employee,” but that this has become less of a consideration “now that Colorado is no longer an anomaly.” States like Washington, Oregon, and, recently, Vermont, have enacted similarly strict pay transparency laws.
Kathleen Caminiti, partner at Fisher Phillips and co-chair of the firm’s pay equity and transparency practice group, named varying definitions of terms like “employer” and “salary range,” as well as penalties and disclosure obligations, as just a few of the differences across state laws. This patchwork poses a challenge for multi-state employers, she said.
“For those employers, they need to decide how much they want to include in their job postings. Do you want a different posting for each state? Probably not, because then it becomes an administrative headache,” Caminiti said. “Coming up with something that would be universal has been an obstacle for employers.
Further, Colorado’s pay transparency law applies to businesses hiring for remote positions anywhere in the US, while others only require employers to post salary ranges for hybrid or in-person roles. Employers recruiting nationwide may struggle to comply with multiple pay transparency laws, possibly leading businesses to limit their hiring to specific states.
Some employers even face discrepancies between state localities, added Littler Mendelson shareholder Kelly Cardin. She noted the differences between pay transparency laws in New York City and New York state as one example, saying that employers in these situations typically “follow the law that’s the most protective of employee rights” to ensure compliance.
“Opportunity” for employers
State pay transparency laws, in theory, are contributing to larger efforts to make workplaces more equitable. Caminiti noted that most employers had already implemented fair pay practices for employees in comparable roles. She said the issue “she hopes to see pay transparency laws tackle” has more to do with what she identified as the “pay opportunity gap,” which primarily affects women and people of colour.
“The differences where you see pay disparities that we still have some work to do is where you have women and individuals that are minorities in lower-paying jobs or more entry[-level] jobs and not moving up the ladder,” Caminiti said. “I think anecdotally, the more you have pay transparency, it provides information to employees to say, ‘that job is a better paying job than the one I have, so maybe I’ll upscale my skillset to qualify me for that role.’”
Both Mitchell and Cardin said there is not yet enough data to determine whether pay transparency laws are achieving their intended policy purposes. It stands to reason that potential loopholes in the legislation – like Vermont’s and other states’ reliance on the “good faith” of employers to determine salary ranges – may diminish their intended effects, although this remains to be seen.
Nevertheless, state pay transparency laws are reshaping how businesses think about wages and compensation. Mitchell said the growing demand for transparency in job postings is “naturally” intensifying competition among businesses, driving them to offer higher salaries and better benefits “to attract talent.”
To stay compliant with state pay transparency laws, Cardin advises employers to conduct internal pay equity audits and ensure their HR personnel and managers “know how to respond to enquiries” about their pay practices. She has also reminded employers of their responsibility to “understand which laws apply to them.”
Caminiti said employers should be prepared to engage in more conversations with employees and applicants about their wages. She also encouraged businesses to consider how they can leverage pay transparency laws.
“For employers paying at the high end of the compensation scale, or that have a generous benefits package, it’s an opportunity for them to take advantage of the transparency requirements. They’re going to stand out as an employer that is paying top dollar,” Caminiti said. “Employers that have a compensation policy that they will pay for talent and want to be best in class will increase competition for [the] best talent out there. It also can encourage some creativity with respect to overall compensation packages.”