Pay Transparency Laws in 2025: What HR Managers Need to Know
By
Samantha Cox
•
May 1, 2025
Pay transparency helps build trust, promote fairness, and close pay gaps across teams. For HR leaders and hiring managers, it’s important to understand current laws, how they affect your hiring process, and what steps you can take to stay compliant while creating a more equitable workplace. This article breaks down the key regulations and what they mean for your team.
Key Takeaways
Pay transparency laws require employers to disclose salary ranges and compensation details in job postings, aiming to reduce wage disparities and promote fairness.
Implementing transparent pay practices enhances employee trust, morale, and retention while helping organizations remain competitive in the job market.
AI technology, such as Fonzi, streamlines recruitment processes and ensures compliance with pay transparency laws, fostering a culture of openness and reducing administrative burdens.
Understanding Pay Transparency
Pay transparency involves openly sharing salary information, including salary ranges, bonuses, and pay structures. This practice aims to reduce wage discrimination and inequities within organizations, fostering a fairer and more equitable workplace environment. Embrace pay transparency by implementing pay transparency policies, which enhances employee trust and fosters a fair workplace environment.
Job postings may need to include additional information about bonuses, other compensation, and benefits alongside salary ranges for a new position. For instance, a job posting may allow Fonzi’s AI interviewer to confirm pay expectations to ensure alignment between the job applicant and company.
With more states mandating salary range disclosures, understanding and adopting these transparency laws is crucial for compliance and fair pay practices.
Why Pay Transparency Matters
Communicating compensation frameworks clearly fosters trust, loyalty, and employee engagement. When employees understand how their compensation is determined, they are more likely to feel satisfied with their pay, leading to higher morale and retention. Transparency in AI processes also fosters trust among candidates and current employees regarding compensation fairness.
Transparent pay practices can differentiate organizations in a competitive job market. While maintaining employee morale can be challenging, especially when transparency laws lead to negative comparisons among coworkers, the overall benefits of fostering a fair and equitable workplace make it a worthwhile endeavor. Additionally, implementing effective pay policies can enhance these transparent pay practices.
Key Components of Pay Transparency Laws
Many states have introduced laws that mandate employers to disclose pay information, particularly in job postings. Employers may be required to provide salary ranges during the hiring process and for promotions, ensuring transparency in compensation. For example, Maryland mandates that employers disclose wage or salary ranges in both public and internal job postings before discussing compensation.
Penalties for non-compliance include civil penalties, with potential consequences varying across states.
The District of Columbia, Hawaii, Illinois, Massachusetts, Minnesota, New Jersey, and Vermont have new pay transparency laws effective in 2025. Specific states with ongoing mandates requiring pay range disclosures include Colorado, California, New York, Washington, Hawaii, Maryland, and Nevada.
States with Pay Transparency Requirements
Several states across the U.S. have implemented pay transparency laws to promote fair wage practices. As of 2025, new pay transparency laws took effect in Illinois, Minnesota, New Jersey, Vermont, and Massachusetts. States with existing mandates for pay range disclosures include Colorado, California, New York, Washington, Hawaii, Maryland, and Nevada.
Understanding the states leading the way in pay transparency helps HR teams stay compliant and build a culture of openness.
California
California has implemented a pay transparency law that requires employers to disclose salary ranges and annual salary range in job postings. This requirement applies to employers with 15 or more employees, ensuring that job seekers have clear information about potential earnings. Employers who fail to comply with the salary disclosure mandate may face penalties.
Mandating salary range disclosures, California promotes fair pay practices, helping job seekers make informed decisions and fostering salary transparency.
Colorado
Colorado law requires employers to disclose pay ranges in job openings and for promotions. Employers must provide salary ranges that are consistent with the pay scale of the position in question, promoting transparency in hiring practices. Non-compliance with Colorado’s pay transparency laws can result in fines up to $10,000.
By following these regulations, Colorado employers foster a transparent and fair workplace, ensuring employees understand potential earnings and advancement opportunities, such as Colorado's equal pay.
Connecticut
Connecticut’s law requires employers to disclose wage scale when requested by employees. Employees have the right to formally request wage ranges from their employers, promoting transparency in compensation. Penalties for employers in Connecticut who fail to comply with wage disclosure requirements include fines.
This legislation empowers prospective employees to seek information about compensation for their new position, fostering a culture of openness and trust within organizations.
Maryland
Under Maryland’s former pay transparency law, employers were required to disclose salary ranges upon an applicant’s request. Non-compliance could result in specific fines, reinforcing the state’s push for transparency in hiring.
Today, Maryland’s pay transparency law includes the following key points:
Employers must disclose wage ranges upon request from applicants.
This law ensures transparency in the hiring process.
There are penalties for non-compliance, which include specific fines for employers who fail to respond appropriately to requests.
This approach helps job applicants understand their potential earnings and promotes fairness in the hiring process by providing a good faith estimate according to job responsibilities.
Nevada
In Nevada, employers are obligated to provide wage information for new positions and promotions. Employers must disclose wage information specifically for new roles and promotions, ensuring that employees are aware of their potential earnings. Nevada imposes penalties on employers for non-compliance with wage disclosure requirements.
This requirement promotes transparency and fairness in compensation programs practices, helping to reduce wage disparities and support equal pay act and pay equity.
New York
New York’s pay transparency law, which became effective in 2023, requires employers to include salary disclosures in job advertisements. The law mandates that job advertisements must include both minimum and maximum salary ranges for the position, as well as the maximum annual salary. Fines are imposed for failure to comply with the salary disclosure requirements outlined in New York’s law.
Providing job seekers with upfront salary information, New York promotes transparency and fair pay practices, including a fixed pay rate and competitive pay.
How Fonzi Enhances Pay Transparency
Fonzi automates critical recruiting tasks to foster transparency in pay practices. Leveraging automation, Fonzi enhances recruitment workflows, ensuring transparent salary communications. This integration supports HR managers in aligning with pay transparency laws and promoting fair pay practices.
Fonzi helps streamline the hiring process, ensuring that salary expectations are consistently communicated to candidates. This automation fosters trust and engagement among candidates and current employees, promoting a culture of transparency and fairness.
Automating Interviews with AI
AI-driven interviews allow for uniform communication of salary expectations during the hiring process. Fonzi ensures uniformity in interviews, providing all candidates with equal opportunities through consistent communication of salary ranges. The AI-driven interview system utilized by Fonzi ensures that salary ranges are consistently communicated across all candidates.
By using AI, companies create a more equitable hiring process, building trust with candidates and enhancing the overall experience.
Integrating Resume Scoring Tools
Fonzi incorporates resume scoring tools to ensure evaluations of candidates are impartial and equitable. Fonzi's integration with resume scoring tools promotes impartial assessment of candidates. This ensures a fair candidate evaluation process, enhancing trust and compliance in hiring practices.
Using Fonzi's resume scoring tools, employers ensure a fair candidate evaluation process, enhancing trust and compliance in hiring practices.
Enhancing Hiring Efficiency
Using Fonzi can streamline hiring operations while still prioritizing a positive candidate experience. Fonzi significantly reduces delays in the hiring process, enhancing overall efficiency while maintaining a positive candidate experience. Utilizing Fonzi, companies significantly reduce hiring process time while maintaining a positive candidate experience.
This automation supports HR managers in aligning with pay transparency laws and promoting fair pay practices.
Benefits of Using AI for Pay Transparency
Incorporating AI helps streamline the hiring process, allowing for better alignment with pay transparency laws. AI automation can significantly reduce the administrative burden on hiring managers, ensuring consistent compliance with pay transparency. Employers may face high costs when implementing pay transparency if they do not use AI, as managers may struggle to adapt to new practices without support.
When candidates see that hiring practices are aligned with transparency principles, it fosters trust and encourages applications from a broader talent pool.
Implementing Transparent Pay Practices
Managers should be educated on compensation philosophy to discuss pay transparency effectively with employees. Engaging leadership and stakeholders is crucial for successful pay transparency initiatives.
Fonzi automates recruiting tasks, making the hiring process quicker and more transparent. Incorporating AI in salary determination can help organizations standardize decisions and eliminate biases in pay practices. AI can analyze objective metrics like job role and tenure, which helps in making equitable salary decisions across teams.
A comprehensive pay transparency roadmap should be developed based on an organization’s unique situation and goals, as well as different job responsibilities.
Common Challenges and Solutions
Implementing pay transparency can lead to a 20% reduction in wage disparities within organizations. Transparency in pay practices helps identify and rectify inequities related to gender, race, or other demographic factors. Organizations that prioritize pay transparency are perceived as more ethical and socially responsible, improving their reputation.
Younger generations, like Millennials and Gen Z, increasingly demand pay transparency as a standard for fairness and accountability, particularly in addressing pay gaps. Some legislation prohibits employers from asking candidates about their applicant’s salary history, even if applicant requests for this information arise.
Governments may struggle with enforcing compliance to pay transparency regulations, particularly as adherence is often lacking even among firms that attempt to follow the laws.
Final Thoughts: Why Pay Transparency Matters in 2025
As more states require pay transparency, HR managers must stay ahead by building hiring practices that are both compliant and equitable. Openly sharing salary ranges and avoiding questions about pay history are no longer just best practices, they’re becoming legal requirements.
By addressing pay disparities head-on and ensuring consistency in how salary information is communicated, organizations can foster trust and fairness across teams. Tools like Fonzi help streamline this process by automating compliance checks and standardizing communication across roles.
Embracing transparency and technology is essential to creating a workplace where everyone can thrive.
