Pay Transparency Laws Close in on the Pay Gap
Massachusetts has recently joined the growing number of states implementing pay transparency measures.
The new law, signed by Governor Healey, imposes several significant obligations on employers. Massachusetts aims to promote wage equity, reduce pay disparities, and empower workers to make informed career decisions.
The legislation imposes several new obligations on Massachusetts employers:
- Salary Range Disclosure: Businesses with 25 or more employees must include salary ranges in all job postings.
- Pay Range Information for Employees: Employers must disclose the pay range for a position to existing employees who are promoted or transferred. Additionally, upon request, employees can inquire about the pay range for their current or desired position.
- Pay Data Reporting: Companies with 100 or more employees will be required to submit wage data reports to the state. The Executive Office of Labor and Workforce Development will aggregate and publish this information to identify potential wage gaps.
The requirement to disclose salary ranges in job postings and provide pay range information to employees takes effect on July 31, 2025. Employers must submit their first round of EEO and pay data to the Commonwealth by February 1, 2025.
The Persistent Pay Gap
Despite progress, the gender pay gap remains a persistent issue in the U.S. workforce. Women, particularly women of color and those with disabilities, continue to earn significantly less than their male counterparts. In 2024, full-time working women earned 84 cents for every dollar earned by men. (Forbes) This disparity is evident across most occupations, highlighting the urgent need for policy changes.
Several states and localities are adopting pay transparency laws to address pay inequality. These measures aim to level the playing field by providing employees access to salary information and requiring employers to disclose salary ranges. These laws seek to reduce pay disparities and promote fair compensation by empowering workers with knowledge.
Colorado pioneered this area, followed by states like Maryland, Connecticut, and California. Cities such as New York City and Jersey City have also implemented similar measures (read more here). Here’s what’s new this year.
New Pay Transparency Laws in 2024
- Hawaii: Requires employers with 50 or more employees to disclose salary ranges in job postings.
- Illinois: Mandates salary range disclosure for employers with 15 or more employees and additional requirements for informing current employees about promotion opportunities.
- Maryland: Expands its existing law to require posting minimum and maximum salary ranges in job postings.
- Minnesota: Requires employers with 30 or more employees to disclose starting salary ranges and benefits information.
- Massachusetts: Mandates salary range disclosure for employers with 25 or more employees and pay data reporting for larger companies.
- Vermont: Requires employers with five or more employees to post salary ranges for job roles.
- Washington, D.C.: Requires salary range disclosure and prohibits employers from seeking salary history information.
These laws vary in their requirements and effective dates but share a common goal: increasing transparency and reducing wage disparities.
As more states adopt pay transparency measures, employers will need to adapt their hiring and compensation practices to comply with the new regulations. Proactive steps, such as conducting pay audits and developing clear salary banding structures, can help businesses navigate these changes successfully.
