Beyond compliance: Adapting to growing pay transparency expectations

Author: Tom Wardrip

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Pay transparency is no longer a trend to watch. It's rapidly becoming a standard business practice and a growing compliance requirement across the US. As more states enact pay transparency and salary history laws, employers are being challenged to reevaluate how they communicate pay, hire talent, maintain compensation records and ensure pay equity across their organizations.

While the specific requirements vary by state, the broader message is consistent: employers are expected to be more transparent about how pay decisions are made and ensure compensation practices are fair, defensible and compliant.

Why pay transparency matters

Pay transparency is about more than posting salary ranges. It affects:

  • Talent attraction and retention
  • Employee trust and engagement
  • Pay equity initiatives
  • Compensation governance
  • Regulatory compliance
  • Employer brand reputation

Employees increasingly expect greater visibility into how organizations determine compensation. Organizations that proactively address pay transparency can improve their ability to attract and retain talent while reducing compliance and reputational risk.

Common challenges employers face

As organizations become more transparent about pay, many discover that their compensation practices were not designed to withstand this level of scrutiny. Common challenges include:

  • Inconsistent pay practices across departments
  • Outdated salary structures
  • Poorly documented compensation decisions
  • Lack of pay equity analysis
  • Reliance on salary history during hiring
  • Difficulty explaining compensation decisions to employees

Pay transparency often exposes foundational compensation issues that may have gone unnoticed until now.

Beyond compliance: A strategic opportunity

The most successful organizations aren't treating pay transparency as a compliance exercise. They're using it as an opportunity to:

  • Modernize compensation programs
  • Strengthen total rewards strategies
  • Improve employee trust
  • Support recruiting efforts
  • Advance pay equity goals
  • Create more consistent compensation practices

Organizations should be able to explain how compensation decisions are made, how pay disparities are identified and addressed, and how pay programs align with business objectives.

State-specific requirements

Effective date: July 1, 2026

Virginia now requires employers to disclose wage or salary ranges in both public and internal job postings, promotions, transfers and other employment opportunities. Employers must establish these ranges in good faith based on factors such as established pay scales, existing compensation ranges or budgeted amounts.

In addition, employers may not request a candidate's salary history during the hiring process from:

  • The applicant
  • A former employer
  • A third-party service provider

Limited exceptions apply only when an applicant voluntarily discloses compensation information and certain legal requirements are met.

Virginia's law also:

  • Prohibits retaliation against applicants or employees for requesting pay range information
  • Allows enforcement through civil penalties
  • Provides certain private rights of action for employees and applicants

What employers should do

  • Review all job posting templates
  • Eliminate salary history questions from hiring processes
  • Validate pay ranges and supporting documentation
  • Assess compensation practices for consistency and equity
  • Train managers and recruiters on the new requirements

Effective date: July 29, 2026

Maine now requires employers with 10 or more employees to include a pay range in job postings. The law defines pay range broadly and allows employers to reference:

  • Existing pay scales
  • Established salary ranges
  • Compensation for employees in similar roles
  • Budgeted pay amounts for the position

Maine also grants employees the ability to request the pay range associated with their current position and requires employers to maintain compensation history records throughout employment and for three years after termination.

What employers should do

  • Review job posting practices
  • Establish formal pay ranges where needed
  • Audit record retention processes
  • Prepare for employee pay range requests
  • Evaluate pay transparency readiness across the organization

Effective Date: October 1, 2026

Connecticut expands its existing pay transparency law, which applies to employers of any size. The law was updated to require employers to disclose, in an internal or public job advertisement, the wages or wage range for the position and a general description of the benefits to be offered with the position. Previously, employers were required to disclose the wage range for a position to an applicant upon the applicant's request, or prior to or at the time an offer of compensation is made, whichever occurred first.

Employers are also seeing a change to the disclosure requirements of a general description of benefits that are broadly defined as "health insurance benefits, retirement benefits, fringe benefits, paid leave, and any other compensation other than wages to be offered with a position."

Employers with at least 100 employees will be required to create an employee guide for pay codes that are most commonly used, like overtime, shift differentials, on-call pay, hazard pay, holiday pay, etc. The guide should include the applicable pay codes and be posted on the employer's website in English, Spanish, and other languages most commonly spoken by the employer's employees.

Connecticut is also clarifying that the law applies to positions performed in Connecticut, as well as positions performed outside the state that report directly to a Connecticut-based supervisor or worksite. The salary history ban previously implemented continues as well.

What Employers Should Do

  • Review job posting practices
  • Establish formal pay ranges where needed
  • Audit record retention processes
  • Prepare for employee pay range requests
  • Evaluate pay transparency readiness across the organization

How Gallagher can help

Whether you're addressing a new state requirement or building a long-term compensation strategy, pay transparency begins with a strong foundation.

Gallagher's Compensation and Rewards Consulting team helps organizations:

  • Develop compensation philosophies
  • Design salary structures
  • Conduct pay equity assessments
  • Evaluate compensation competitiveness
  • Build defensible pay practices
  • Prepare for evolving pay transparency requirements

A well-defined compensation strategy helps organizations navigate changing regulations while supporting business objectives, talent attraction, retention and employee trust.

Pay transparency legislation will likely continue to expand across the country. The organizations best positioned for success will be those that move beyond simple compliance and establish clear, equitable and transparent compensation practices.

Now is the time to assess whether your organization is prepared. Contact Gallagher's Compensation and Rewards Consulting team to discuss your pay transparency readiness and compensation strategy.

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