Pay Transparency Laws Are Here. Is Your Pay Ready?

Pay transparency laws continue to change the way employers approach compensation. It started with a handful of state and local requirements and has now grown nationwide, creating new challenges for HR teams managing workforces across multiple locations. Before posting salary ranges publicly, organizations need to understand whether their compensation strategy can stand up to employee, candidate, and regulatory scrutiny.

Top Takeaways for HR

• Posting salary ranges publicly before auditing internal data often exposes instances where new hire offers match or exceed the earnings of long-tenured employees, creating trust issues and immediate internal pushback.
• While salary benchmarking answers whether your pay ranges are externally competitive against the market, a formal pay equity analysis is required to determine if pay distribution is internally equitable and legally defensible among employees performing similar work.
• To safely disclose pay ranges, HR must follow a three-step progression: first, align internal job architecture; second, benchmark against external market data; and third, perform an annual pay equity audit to rectify disparities before publishing.

The Rise of Pay Transparency Laws

Pay transparency laws are changing how organizations approach compensation. Over the last several years, states and municipalities have introduced requirements designed to give job candidates and employees greater visibility into compensation practices.

Currently, numerous states have enacted pay transparency laws, along with additional local jurisdictions that have their own requirements. Even though the details vary by location, many laws require employers to include salary ranges in job postings or provide pay information to candidates during the hiring process.

For HR teams, the challenge is that compliance requirements are becoming more complex, especially for organizations with employees working across multiple states. And transparency can expose pay inequities or pay compression within organizations.

A company may have employees in locations with different disclosure requirements, different definitions of covered employers, and different expectations around when salary information must be provided. Managing compensation consistently across these environments requires more than simply adding a salary range to job postings.

Why Multi-State Employers Need a Strategy

For organizations operating across multiple states, pay transparency can’t be treated as a one-time legal update. It requires a broader review of compensation practices.

The question you and your HR team should be asking is: “Are we comfortable showing the market, and our employees, how we determine pay?”

If you are unsure how to answer that question, then it may be time to evaluate your compensation structure before transparency requirements force the conversation.

What’s at Stake When You Post Salaries Publicly

Publishing salary ranges can be a positive step toward building trust and improving candidate experiences. On the flip side, transparency can also reveal issues that organizations may not realize exist.

The risk is not the transparency itself. The risk is discovering inconsistencies or inequities after the information is already public.

Employees May Discover Pay Differences

Imagine an employee sees a job posting for a role similar to theirs with a salary range that starts higher than their current pay, what is also known as pay compression. They may begin asking you:

• Why is the company offering more for new hires?
• Is my compensation aligned with my experience and performance?
• Are employees in similar roles being paid consistently?

These conversations are becoming more common as employees gain access to more compensation information and are now more at ease discussing their pay with their colleagues.

According to a Pay Equity and Pay Transparency Report, 69% of employees feel comfortable discussing salary with coworkers, and 52% have already discussed compensation with coworkers.

Candidates May Pass on Opportunities

Salary ranges are becoming an important factor in job searches. If your posted range is not competitive with the market, qualified candidates may choose not to apply.

This creates a challenge for employers that have not recently evaluated whether their compensation structure reflects current market conditions.

Transparency Can Expose Pay Equity Concerns

Public salary ranges may also bring attention to potential pay gaps, including gender pay gaps or disparities affecting other protected groups.

Organizations that discover these issues after posting compensation information may find themselves responding defensively instead of addressing concerns proactively.

So, what proactive steps can you and your HR team take?

Step 1: Start With External Salary Benchmarking

One of the most critical and accessible places to begin preparing for pay transparency is with salary benchmarking.

Salary benchmarking, or compensation benchmarking, is the process of comparing your organization’s compensation levels against external market data for similar roles. It helps employers understand whether their pay is competitive and where adjustments may be needed.

Benchmarking can help answer questions like:

• Are our salaries aligned with the current labor market?
• Are we paying above, below, or at market rates?
• Are our salary ranges realistic for attracting qualified candidates?

That said, organizations need to review their job architecture before building salary ranges.

Job Architecture Comes First

Effective benchmarking requires a clear understanding of your internal roles. This includes reviewing:

• Job families
• Career levels
• Responsibilities and scope
• Similar roles across departments
• Geographic differences

Without consistent job architecture, benchmarking data may not provide an accurate picture of your compensation strategy.

Once roles are properly aligned, you can use market data to build salary ranges that reflect external expectations.

HR Pro Tip: External benchmarking tells you how your pay compares to the market, but it does not tell you whether employees within your organization are being paid fairly compared to one another.

That’s where step 2 and pay equity analysis comes in.

Step 2: Go Deeper with Pay Equity Analysis

A pay equity analysis evaluates compensation differences among employees performing similar work while considering legitimate factors such as experience, education, performance, location, and job responsibilities.

While salary benchmarking helps answer “Are we competitive?” a pay equity analysis helps answer “Are we equitable?”

These are two different questions, and both matter.

Why Benchmarking Alone Isn’t Enough

An organization could have salary ranges that align perfectly with market data but still have internal pay inconsistencies.

For example, a company may discover through a pay equity analysis that employees in similar roles have compensation differences that cannot be fully explained by business-related factors.

Identifying these issues before posting salary ranges gives you an opportunity to review and address concerns.

HR IRL: A growing company prepares to comply with new pay transparency requirements and publishes salary ranges for open positions. Shortly afterward, employees begin questioning why some newer hires are earning salaries close to the top of the range while long-tenured employees are below market.

This situation, often called pay compression, occurs when the gap between new hire pay and existing employee pay narrows or disappears.

A pay equity analysis can help organizations identify these challenges before they become employee relations issues.

Make Pay Equity Analysis an Annual Practice

Compensation changes constantly. Employees are promoted, market rates shift, and organizations hire new talent.

Conducting a pay equity analysis annually allows you and your HR team to:

• Identify potential pay gaps
• Address compensation inconsistencies
• Monitor progress over time
• Support fair and defensible pay decisions

A consistent review process also helps employers demonstrate that pay compliance is part of their broader workforce strategy, and not just a response to regulation.

Building a Proactive Pay Compliance Strategy

Pay transparency laws are prompting organizations to take a closer look at their entire compensation strategy. The employers that are best positioned for these changes are not waiting until a compliance deadline arrives. They are preparing now.

Again, a strong approach follows a clear sequence:

1. Start with salary benchmarking to understand external competitiveness.
2. Conduct a pay equity analysis to identify internal inconsistencies and potential pay gaps.
3. Establish salary bands and ranges that HR teams can confidently share with candidates and employees.

This process gives organizations a stronger foundation for compliance and helps create a compensation strategy that supports recruitment, retention, and employee trust.

An HR compliance as a service (HR CaaS) partner, such as OutSolve, can provide HR with valuable support by combining expert guidance, ongoing monitoring, and practical tools to help organizations stay ahead of changing requirements.

The risk of not acting is often greater than the risk of uncovering an issue. Finding compensation concerns gives your organization the opportunity to address them before they become larger challenges.

What Pay Transparency Laws Mean for Your Organization

Pay transparency is changing the expectations employees and candidates have around compensation. Organizations taking a proactive approach will be better prepared to meet regulatory requirements, strengthen employee trust, and compete for top talent.

The goal is not simply to post salary ranges. The goal is to understand the story behind those ranges and ensure your compensation practices reflect your organization’s values.

By starting with salary benchmarking, followed with pay equity analysis, and building a sustainable compliance strategy, HR teams can approach pay transparency with confidence.

OutSolve is ready to be your HR CaaS partner. Contact us today for next steps.

Neil Dickinson

Leading Compensation Services at OutSolve, Neil helps organizations align pay, performance, and compliance through data-driven benchmarking, pay equity analytics, and global pay transparency initiatives. His team partners with employers across industries to design and operationalize compensation programs that are fair, competitive, and compliant—supporting business growth, workforce trust, and readiness for evolving regulations, including the EU Pay Transparency Directive. Neil brings over 20 years of experience working with HR, Talent Acquisition, and Compensation teams across the country to build best-in-class compliance programs. He has supported clients in EEOC equal pay charges and has also designed Pay Equity Analytics to provide federal contractors better visibility to pay gaps within their organizations. Neil regularly delivers training on compensation topics for SHRM, ILG, and other industry HR group events. Neil received his undergraduate degree from the University of South Carolina and The University of Hull in England and his MBA from The Citadel. He is also SHRM certified.