Pay transparency laws are gaining momentum across the United States, aiming to reduce gender and racial wage gaps. These regulations require employers to include salary ranges in job postings and provide compensation information upon request from employees or job applicants.
This trend has now arrived in Vermont, where new pay transparency legislation is set to go into effect July 1, 2025. So, what is the new Vermont pay transparency law, what does it mean for HR, and how can you stay ahead of the game and help your organization comply? Let’s review the details of the law and how HR can prepare their organizations.
Here’s three key takeaways you’ll learn in this article:
Vermont’s pay transparency law is officially known as H.702 - An Act Relating to Pay Transparency. It was signed into law in 2024 and will go into effect on July 1.
The goal behind this law is to make compensation practices more transparent and equitable for job seekers and employees. It’s all about making sure that employees, regardless of their gender, race, or other personal characteristics, are being paid fairly for their work and closing any historical pay gaps.
The law mandates that employers provide specific pay-related information to both current and prospective employees. By requiring salary transparency in job postings and during the hiring process, Vermont is supporting the elimination of pay discrimination.
Now that you know the basics, let’s get more specific and break down the key requirements of the law.
Again, one of the primary changes under Vermont’s pay transparency law is that employers are now required to disclose salary ranges in job postings. This is a major change from previous practices and pay philosophies, where salary information was usually not volunteered or disclosed.
Here’s the scoop on salary disclosure under this law:
Vermont’s law also includes a prohibition against pay inquiries. Remember when it was common practice for HR to ask the question “What was your salary/wage in your most recent job?” Well, this law changes that, meaning that employers are not allowed to ask candidates about their salary history during the hiring process. The rationale is that asking about past compensation can continue the cycle of pay inequities. By removing this question from the hiring process, it prevents employers from inadvertently continuing pay disparities based on a candidate’s previous salary.
So, what does this mean for you? When conducting interviews or reviewing resumes, it’s critical to focus on the skills, experience, and qualifications a candidate brings to the table, not how much they were paid at their last job. If you have salary questions on your list of interview topics, go ahead and remove it.
Vermont’s pay transparency law benefits both job seekers and current employees. Under this law, they have the right to:
Of course, questions about pay, particularly about other employees, are sensitive. It’s important to remember that HR needs to strike a balance between pay transparency and confidentiality concerns, as well as data privacy and protections rules and regulations.
To stay compliant, employers must keep records of the pay ranges provided to employees and applicants for at least five years once the law goes into effect. This documentation is essential in case the Vermont Department of Labor conducts an audit or if an employee files a complaint.
Additionally, employers will need to track and retain records of any pay inquiries made by employees and applicants. This will likely require HR departments to adjust their systems and processes, so records are easy to access and review in case of an audit.
So, what happens if an employer doesn’t comply with Vermont’s pay transparency law? The penalties for non-compliance can be steep, and the state has the authority to enforce fines for violations. Specific fines will depend on the severity and nature of the infraction, but the Vermont Department of Labor can issue penalties for failure to disclose required salary ranges in job postings or failure to provide pay information upon request.
Employers could also face legal action if an employee believes they’ve been discriminated against due to a failure to comply with the law.
With Vermont’s new law in place, it’s time for employers to adjust their HR practices to meet the requirements. Here’s some steps you can take to make sure your company is ready for July 2025:
For those who want even more detail into the specifics of Vermont’s pay transparency law the full text of H.702 is here. Also, working with a compliance expert like OutSolve can help your organization stay on top of your state pay transparency laws. We also offer services like salary benchmarking and pay equity audits to ensure your pay practices are non-discriminatory and that you have a competitive salary structure. Outsolve’s Ultimate Guide to State Pay Transparency Laws is a great resource for employers who need guidance on navigating these complex requirements. You can find it here.
Vermont’s pay transparency law is just around the corner, so it’s important for HR to stay ahead of the curve. The law’s focus on transparency and equity will ultimately benefit both employers and employees by cultivating a more open and fair workplace. By updating job postings, reviewing compensation structures, and training hiring managers, your organization will be ready come July 1 2025.
Remember, proactive compliance is key. Don’t wait until the last minute to make adjustments! Reach out to our compensation experts for guidance and ensure that your company is ready.
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