Vermont is the latest state to pass a pay transparency law, joining a growing list of states, counties and cities where employers are required by law to publicize their salary ranges to job candidates.
The Vermont law, which goes into effect next year, is also among a handful of recently passed legislation where workers will soon be entitled to pay ranges in the near future:
- Washington, D.C.: Effective June 30, 2024
- Maryland: Effective Oct. 1, 2024
- Illinois: Effective Jan. 1, 2025
- Minnesota: Effective Jan. 1, 2025
- Vermont: Effective July 1, 2025
With these updates, an estimated 1 in 3 workers will be impacted by pay transparency laws by 2025, says Lulu Seikaly, senior employment counsel at Payscale.
Some pay transparency laws require that an employer list their intended pay range for a role on any publicized job description. Those laws apply to workers in California; Colorado; Hawaii; Illinois; Minnesota; New York (with specific laws in New York City, Ithaca and Westchester County), Jersey City, New Jersey; Vermont; Washington and Washington, D.C.
Other laws state a job-seeker is entitled to the pay range at certain points of the hiring process, like during a first interview or when they get an offer. In some cases, candidates can request this information, while in others, the hiring manager must proactively provide it. These types of laws are enforced in Connecticut; Maryland; Nevada; Cincinnati and Toledo, Ohio; and Rhode Island.
Additional states, including Maine, Massachusetts, Michigan, New Jersey, and Pennsylvania, have their own pay transparency proposals on the table, which could move forward before the end of the year.
“The year 2022 was known as the year of pay transparency, but 2024 is giving it a run for its money, as we are seeing more action on the legislation front,” Seikaly tells CNBC Make It.
Lawmakers have even introduced a federal pay transparency bill, though it’s currently pending with the House of Representatives.
“It’s important to note that the House is currently controlled by Republicans, so personally, I’m not very optimistic about the bill being passed before the end of this year,” Seikaly says. “However, this feeling will change if the Democrats control the U.S. House of Representatives, the U.S. Senate and the White House, as it presents strong chances of a national pay transparency law enactment.”
Pay ranges on jobs ads can close wage gaps and boost hiring
Proponents of pay transparency laws say such efforts can close racial and gender wage gaps, especially when salary ranges are required in job descriptions.
For example, the gender wage gap among workers with federal jobs, which list pay publicly, was roughly 6% in 2022, compared with 16% nationally.
And in Colorado, the first state to pass a pay transparency law in 2019, publicized salaries increased by about 3.6% after the law went into effect, which could indicate that greater transparency gave workers more leverage to negotiate their pay.
Workers across generations support transparent pay policies and want to work for companies that embrace them. A majority, 58% of workers say they prefer job postings that include a pay range for the position, according to a September 2023 survey of 4,402 adults by the National Women’s Law Center (NWLC) and Morning Consult. A similar share, 60%, say they support implementing pay range transparency practices in their workplace.
And roughly 1 in 3 workers say they’ve applied for a job they otherwise wouldn’t have been interested in because they saw the pay range listed alongside it.
Pay range laws impact workers beyond the states that pass them
Recent legislation has pushed employers to publicize their pay ranges even if they aren’t located in a state or municipality where a law exists, according to research from the NWLC and Glassdoor.
Transparent pay policies are especially gaining momentum among businesses that operate in multiple states, says Joy Rosenquist, a shareholder at Littler, a labor and employment law firm. A company based in New York City that has offices across the U.S. is likely to enact a sweeping pay transparency policy, even if they don’t have to in certain offices, she says.
It can also be a “valuable retention and recruitment tool” for businesses. “The employer that discloses information more than they’re required to is someone who garners more trust from a candidate pool and from their employees,” Rosenquist says.
That trust can be good for business. Top-performing companies that exceeded their 2023 revenue targets are more likely to have transparent pay policies in place, according to a recent report from Payscale.
And efforts go beyond posting pay ranges on open jobs: More than half of top-performing companies say they provide “always-accessible pay communications to their employees that explains the ‘why’ behind their pay,” versus 35% of non-top performers, according to Payscale.
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