What Is Pay Transparency?

Quick Answer

Pay transparency is the act of communicating salary ranges for jobs. Companies may practice pay transparency at their own discretion, but in some states, companies are required to share salary ranges on job listings for internal and external roles.

Four workers having a meeting together at a table in a conference room.

Until recently, ads for job openings rarely shared salary ranges to help steer your negotiations. And keeping quiet about your salary was an unwritten rule around the office, making it difficult to determine if you are or aren't getting paid fairly for your work. Today, things are changing.

Pay transparency is when a company openly discusses salaries, and encourages an environment where employees can talk about their pay with others.

What Is Pay Transparency?

The pay transparency movement is pushing companies to open up about what their employees earn, with the idea that removing secrecy could be a step toward making pay equality possible. The purpose of disclosing salaries is to make employees and applicants aware of pay scales on roles so they can better negotiate competitive compensation.

Multiple states have enacted pay transparency laws. For example, Colorado, California and several more require that companies put salary ranges in job listings. And some companies choose to remove the veil to an even greater level. Buffer, a social media management software company, goes so far as to publicly post salaries of all its employees, including the CEO.

Why Is Pay Transparency Important?

Pay transparency makes it possible for you to determine if you're getting paid fairly for your role compared to peers and other open job listings on the market.

Pay Transparency May Help You Negotiate a Better Salary

Requesting salary ranges at your company could help you identify if you're getting underpaid so you can negotiate a raise or consider seeking a higher wage somewhere else. When interviewing for a job, knowing the salary ranges upfront can help you avoid undercutting yourself in negotiations by pitching a salary that's less than what a company is willing to pay.

Pay Transparency May Help With Pay Inequality

Advocates of pay transparency say that clarity on salaries can create a culture of trust, attract talent and boost job satisfaction. And from an economical standpoint, requiring companies to share pay scales is a strategy lawmakers are hoping will fix pay inequality.

In 2022, Pew Research found that women earned $0.82 for every dollar earned by men. According to a 2019 study by PayScale, Black men earn $0.87 per every dollar a white man earns, and Hispanic or Latino men earn $0.91 per every dollar a white man earns.

The idea is for pay transparency to level the playing field by making underpaid minorities and women aware of their salary potential, so they can avoid low salary offers. That said, pay transparency does have opposition. Some believe that sharing salaries will cause animosity between workers and may result in employers hiring fewer people. And there are concerns that equal pay laws could increase salaries of low-paid workers but unintentionally make overall salaries lower because employers may be less flexible in salary negotiations.

Which States Have Pay Transparency Laws?

Colorado was the first state to turn pay transparency into law. Since then, many more states have joined the movement. Below are states with pay transparency laws:

  • California: Companies with 15 or more employees must disclose pay ranges in open job listings, and employees can request a pay scale for their position.
  • Colorado: Companies are required to add compensation to job postings, notify employees of promotion opportunities and keep job descriptions and salary records.
  • Connecticut: Companies are required to disclose salary ranges for openings to applicants and employees upon request or when the applicant is made an offer.
  • Maryland: Companies must provide a salary range upon request, and they cannot rely on your salary history to determine your pay unless it's to support a higher salary.
  • New York: Companies must list salary ranges for job opportunities and promotions.
  • Nevada: Companies must disclose the pay range after an applicant's interview and for current employees if they apply or interview for a promotion. Employers are also prohibited from using your wage history to determine your salary.
  • Rhode Island: Companies have to provide a salary range for a position upon request.
  • Washington: Companies with 15 or more employees must provide a wage scale or salary range and description of benefits and other compensation on job postings.

What if a Company Doesn't Practice Pay Transparency?

If a company isn't required to disclose a salary range, you still have options. Resources like GlassDoor, PayScale and Levels.fyi can help you track down the average salary for positions in various fields, and you can use this as a reference point to ensure you're getting paid fairly.

Over time, it will be possible to quantify what impact the pay transparency movement has on income equality. However, the short-term effect of the movement has made discussions about salary more public. And with knowledge about what others are earning, it could give you more leverage to ask for a competitive pay.