What Pay Transparency Really Means for Your Business in 2025

In the era of salary bands in job posts and Glassdoor reviews surfacing overnight, pay transparency is no longer a trend; it’s a transformation. Businesses across the U.S. are navigating new legislation and shifting employee expectations around how compensation is shared, discussed, and decided.

Whether you're already updating job descriptions or still figuring out what the new laws mean, this guide will help you understand why pay transparency matters and what it means for your hiring, retention, and compliance strategy.

Table of Contents

• What Is Pay Transparency, Really?
• The New Legal Landscape: States Leading the Way to Pay Transparency
• Employees Expect Pay Transparency, Even if the Law Doesn't Require It
• The Benefits (and Risks) of Pay Transparency
• Navigating Pay Transparency as a Small or Midsize Business
• Preparing For What's Next with Pay Transparency

What Is Pay Transparency, Really?

At its core, pay transparency refers to how openly a company communicates about pay practices. This might include:

• Sharing salary ranges in job listings

• Publishing promotion and bonus criteria

• Educating employees about how pay decisions are made

Contrary to myth, transparency doesn't require you to publish everyone's salaries. Instead, it’s about clarity, ensuring your employees understand how compensation works and that it’s based on fair, consistent standards.

Why it matters: Employees who feel confident in your compensation practices are more likely to trust your company, stay longer, and advocate for your brand. Lack of clarity? That opens the door to disengagement and turnover.

Related reading: How to Plan for Employee Raises: A 2025 Guide for Employers

The New Legal Landscape: States Leading the Way to Pay Transparency

As of mid-2025, over a dozen U.S. states have enacted some form of pay transparency law, including California, New York, Illinois, and Washington. Others—like Oregon and Michigan—are reviewing proposed bills.

These laws generally fall into two categories:

• Internal transparency laws: Require businesses to inform current employees about pay ranges or promotion criteria.

• External transparency laws: Require businesses to disclose salary ranges in job ads.

What this means for employers: Even if your business isn’t located in one of these states, remote work and multi-state hiring may bring you under these legal umbrellas. Ignoring these laws can result in fines, legal risk, and reputational damage.

Tip: Review your compensation strategy in collaboration with an HR compliance partner. Excelforce HR Compliance Services offers tools to help you stay ahead of evolving mandates.

Employees Expect Pay Transparency, Even If the Law Doesn’t Require It

The shift isn’t just legal. It’s cultural.

A growing number of employees, especially younger workers, are comfortable talking about pay. According to a 2024 Bankrate survey, 68% of Gen Z workers say they’ve discussed salary with a coworker or peer. And that number is climbing.

Why does this matter for you? Because employees are already sharing salary data on platforms like Glassdoor, Reddit, and Fishbowl. If your company doesn’t proactively manage its compensation narrative, you may find it written for you.

The Benefits (and Risks) of Pay Transparency

Potential Benefits of Pay Transparency

• Increased trust between the employer and employees

• Improved retention and morale

• Competitive advantage in hiring

• Reduced risk of unconscious bias in pay decisions

Potential Risks of Pay Transparency

• Internal tension if inequities are exposed

• External scrutiny from candidates or reviewers

• Privacy concerns if transparency is poorly implemented

How to Ensure You Have a Fair Pay Transparency Policy

1. Audit your current pay practices. Are ranges consistent across departments? Is there historical bias in raises or promotions?

2. Create a formal compensation philosophy. Put in writing how pay is determined.

3. Train your managers. They’re the first line of communication when employees have questions.

4. Partner with your HR tech provider. Systems like Excelforce's Payroll and Time & Labor tools ensure your pay data is accurate and accessible.

Navigating Pay Transparency as a Small or Midsize Business

You don’t need to be a Fortune 500 company to take transparency seriously.

In fact, smaller businesses may benefit the most by using transparency to build a strong employer brand and stand out in the talent market.

Start small by:

• Including salary ranges in job posts (even if ranges are broad)

• Clearly outlining criteria for raises and promotions

• Explaining your pay strategy during onboarding

💡 Pro Tip: A structured onboarding process that introduces your compensation philosophy helps set expectations from day one.

Preparing for What’s Next with Pay Transparency

Pay transparency laws will continue to expand and so will employees’ expectations with them. Employers who take a proactive, people-first approach will benefit not only from legal compliance but also from stronger retention, a better candidate pipeline, and a more equitable workplace.

To get ahead of the curve:

• Schedule a compensation audit this quarter

• Work with HR to document your compensation strategy

• Update job postings and onboarding materials

• Explore HR software that keeps your data clean and your practices consistent

Ready to Build a Transparent and Compliant Workforce? Excelforce helps businesses like yours align compensation, performance, and compliance, all in one integrated platform.

Keep Learning with Excelforce

Explore more helpful content:

• 30+ Creative Employee Benefits to Help Your Company Stand Out
• Should You Offer Payroll Cards to Employees? The Benefits of Payroll Cards
• How To Plan for Employee Raises: A Guide for Employers

©2025 - Content on this blog is intended to provide helpful, general information. Because laws and regulations evolve, please consult an HR professional or legal expert for guidance specific to your situation.