BusinessJobs / Employment


Why are more states changing pay transparency laws?

New laws mean more employers are required to share salary data with prospective employees.
Posted at 3:31 PM, Feb 03, 2023

If you’re looking for a job, you could know your potential salary before applying. That’s because more states and cities are enacting pay transparency laws, including in Colorado, California, and Rhode Island.  

Lulu Seikaly is a senior corporate employment attorney at Payscale. She says the rules for salary disclosures varies by region. 

"When we look at all of these states and cities and municipalities have enacted pay transparency legislation, we're looking at now almost one in four workers who are going to be affected by some sort of pay transparency legislation," Seikaly said. 

In some cases, it requires employers to share salary ranges upon request or after an interview — with exemptions for small businesses. In other cases, employers must post salary ranges on job postings. 

Seikaly says the movement was sparked by Colorado’s Equal Pay for Equal Work Act and was further fueled by social media.

"It's kind of twofold. Colorado kind of started back in 2021 with this legislation and then societally, we've got the younger generation using their voices on social media saying, 'I don't know why this is taboo. We should be talking about it,'" Seikaly said. 

Drew Moreno says the Colorado law eliminated his serial job hopping and catapulted him to his new career — jump-starting other careers at a workforce center. 

"It’s almost taboo. When I would get advice from people from previous generations like my parents or grandparents, they would always say 'just take what they give you. Be happy you have a job.' I had that mindset going forward. I think with this policy change, I think there’s going to be a change in the way this generation thinks about what your worth is as a worker," Moreno said.  

Part of that mentality change, Seikaly says, is to try to unpack and address economic disparities across several groups. 

"We have customers that come to Payscale and they're doing their pay equity analysis. Of course, no organization is going to be paying someone differently, but they uncover it because of years and years of systemic inequality. And it just, you know, the pay equity gap is wider, wider and wider, when they don't do anything about it," she said.  

And workers are demanding transparency.  

How you can use new salary transparency laws to negotiate your pay

How you can use new salary transparency laws to negotiate your pay

A 2022 research article found evidence that pay transparency causes increases in both the equity and equality of pay.


Glassdoor survey found about 84% of workers aged 18 to 34 and 88% of workers aged 35 to 44 say it’s very important.  

"At the end of the day, if you're a candidate looking for a job and you have two job postings, one has a really awesome salary range and there's no salary range. On the second job posing as a candidate, you may say, 'why are they hiding the ball? Are they embarrassed by how much they're paying their employees?'" she said. 

And while the transparency could provide a financial lifeline for some workers. Seikaly says it could cause growing pains on both sides, as workers could suddenly question their current salaries and companies might struggle to adjust to a new way of doing business. 

"From our viewpoint. It's a lot — becomes a lot of work at the front end. A lot of employers haven't done kind of the compensation philosophy. They haven't figured out how often they're going to look at compensation. So this is brand new for them, which means it's going to be a really big heavy lift year one," Seikaly said.  

And if history has taught us anything, more jurisdictions are likely to implement pay transparency laws, which could encourage employers to jump ahead of the movement to attract top talent. 

"We're seeing a lot of customers coming to us on their own saying, 'hey, we don't hire remote workers. We only hire workers in person. My state doesn't require pay transparency, but our competitors are posting salary ranges.' And we know that in order to get the absolute best talent that we have to be transparent about our data and not only be transparent about the pay to be competitive as well," Seikaly said.