Pay Transparency Laws in 2026: What HR Managers Need to Know
By
Samantha Cox
•
May 1, 2025
Pay transparency is a movement toward trust, fairness, and equity in the workplace. It empowers employees, holds organizations accountable, and helps close long-standing pay gaps. But what does that mean for HR leaders and hiring managers? It means understanding the laws that shape pay transparency, how they impact your hiring practices, and what steps you can take to stay compliant without compromising your competitive edge. In this article, we’ll break down the key regulations, why they matter, and how your team can create a culture where fairness isn’t just promised, it’s practiced.
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 is the practice of openly sharing salary information, including base pay, bonuses, and overall compensation structures. Its goal is to reduce wage gaps and discrimination, fostering a fair and equitable workplace. Implementing clear pay transparency policies not only supports compliance with evolving laws but also builds trust and credibility with employees.
Job postings increasingly need to include detailed compensation information, such as salary ranges, hourly wages, bonuses, and benefits. Many states now require employers to provide a good-faith estimate of expected pay in listings. By clearly communicating compensation upfront and adhering to transparency guidelines, organizations can ensure alignment between candidates and company expectations while promoting fairness, equity, and trust throughout the hiring process.
Why Pay Transparency Matters
Clearly communicating compensation frameworks builds trust, loyalty, and long-term engagement. When employees understand how their pay is determined, they’re more likely to feel valued and fairly treated, boosting morale, satisfaction, and retention. Extending this transparency to AI-driven processes further reinforces confidence among both candidates and employees, ensuring that compensation decisions are seen as fair, consistent, and unbiased.
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. Many of these laws require salary information to be included in both external job postings and job listings for internal job transfers, internal transfers, or internal promotions. 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 all job listings, including those for internal transfer opportunities, before discussing compensation.
Penalties for non-compliance can include civil fines, and the specific consequences vary by state. Several states are expanding their pay transparency requirements in 2025, including the District of Columbia, Hawaii, Illinois, Massachusetts, Minnesota, New Jersey, and Vermont. Other states, such as Colorado, California, New York, Washington, Hawaii, Maryland, and Nevada, already have ongoing mandates that require employers to disclose pay ranges in job postings.
States with Pay Transparency Requirements
Several states across the U.S. have implemented pay transparency laws to promote fair wage practices. As of 2026, 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. Some state laws apply to employers with at least one employee, while others set the threshold at four or more employees.
Understanding the states leading the way in pay transparency helps HR teams stay compliant and build a culture of openness. Many of these laws apply to private employers, not just public sector organizations.
California
California has implemented a pay transparency law that requires employers to disclose salary ranges and annual salary ranges in job postings. This requirement applies to employers with 15 or more employees, guaranteeing 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. Under Colorado's Equal Pay for Equal Work Act, employers are required to include pay scales, benefits, and job details in postings to provide compliance and promote pay transparency. 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, confirming employees understand potential earnings and advancement opportunities, such as Colorado’s equal pay.
Connecticut
Connecticut’s law requires employers to disclose the 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, guaranteeing 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 program practices, helping to reduce wage disparities and support the 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.
City-Level Pay Transparency Laws
City-level pay transparency laws are becoming increasingly common, as major cities introduce regulations to promote fair pay and pay equity. Cities such as New York City, Jersey City, and Cincinnati now require employers to disclose salary ranges in job postings. These laws generally apply to companies with five or more employees and often specify that both minimum and maximum salaries or hourly wages must be listed.
In New York City, every job posting must include the minimum and maximum salary range, giving candidates clear expectations about compensation. Jersey City goes further by requiring not only salary ranges but also a description of benefits. Noncompliance with these laws can result in civil penalties, making it critical for employers to stay informed and up-to-date.
Following city-level pay transparency laws helps employers avoid penalties while demonstrating a commitment to fairness and equal opportunity. Transparent pay practices build trust, attract top talent, and reinforce a culture of equity within organizations. Leading startups and tech companies, particularly those seeking engineers with strong problem solving skills, increasingly rely on these practices to stand out in a competitive hiring market.
How Fonzi AI Enhances Pay Transparency
Fonzi automates key recruiting tasks to promote greater pay transparency and fairness. Through automation, it streamlines hiring workflows and provides clear, consistent salary communication at every stage of recruitment. Fonzi powers advanced AI tools to analyze data from the hiring process, providing actionable analysis and feedback to HR teams to support fair and transparent decision-making. This approach helps HR leaders stay aligned with evolving pay transparency laws while building trust and equity across their teams.
Fonzi helps streamline the hiring process, guaranteeing 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 provides uniformity in interviews, providing all candidates with equal opportunities through consistent communication of salary ranges. The AI-driven interview system utilized by Fonzi guarantees that salary ranges are consistently communicated across all candidates.
By using AI, companies create a more equitable hiring process, building trust with candidates and improving the overall experience.
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.
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.
AI can analyze objective metrics like job role and tenure, which helps in making equitable salary decisions across teams. Clear communication of pay information to each job candidate is a key part of implementing transparent pay practices.
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 about an applicant's salary history, even if the applicant requests this information.
Governments may struggle with enforcing compliance with pay transparency regulations, particularly as adherence is often lacking even among firms that attempt to follow the laws. Additionally, certain laws require employers to provide salary information to current employees seeking details for promotions or internal transfers.
Resources for HR Managers
HR managers have access to a variety of resources to help navigate pay transparency laws and implement fair pay practices. Leading organizations like the Society for Human Resource Management (SHRM) offer comprehensive guidance on transparency laws, pay equity, and equal pay. The Equal Employment Opportunity Commission (EEOC) also provides valuable resources on pay equity and compliance with federal regulations.
In addition to these organizations, HR management platforms can streamline compliance by automating job postings and tracking salary range disclosures. Legal advisors can offer tailored advice on local and state transparency laws, while webinars and industry conferences keep HR professionals informed about the latest developments in fair pay practices.
By using these resources, HR managers can stay ahead of evolving transparency laws, champion pay equity, and position their organizations as leaders in fair pay and equal opportunity.
Future of Pay Transparency
The future of pay transparency is defined by growing regulations, with more cities and states requiring employers to share salary ranges, benefits, and other compensation details throughout the hiring process. To stay ahead, companies must review and update pay policies, train managers, and ensure full compliance with evolving laws.
Transparent pay practices do more than meet legal requirements; they help close pay gaps, increase employee satisfaction, and strengthen a company’s reputation as a fair and equitable employer. In the competitive tech and AI sectors, roles such as AI engineer demand advanced problem-solving skills and familiarity with machine learning models. Clear job descriptions, thorough documentation, and accessible hiring processes are essential. Organizations that embrace transparency and equitable compensation are better positioned to attract top talent, foster trust, and maintain a strong competitive advantage in a talent-driven market.
Summary
Pay transparency is rapidly shaping the future of hiring, promoting fairness, equity, and trust in the workplace. Laws at the state and city level now require employers to disclose salary ranges, benefits, and other compensation details in job postings and throughout the recruitment process. Organizations that embrace transparent pay practices not only stay compliant but also strengthen their reputation, boost employee satisfaction, and attract top talent.
In competitive sectors like AI and technology, transparency is especially critical. Clear job descriptions, consistent communication of compensation, and fair evaluation processes help companies stand out to skilled candidates, including engineers and technical specialists. Tools like Fonzi AI further enhance transparency by automating salary communication, streamlining hiring workflows, and providing equitable decision-making. By prioritizing transparent pay practices, organizations can close wage gaps, foster trust, and maintain a competitive edge in a rapidly evolving talent market.
