The Massachusetts Legislature passed its long-awaited pay transparency law July 24. Governor Maura Healey signed the bill July 31, which will take effect July 31, 2025.

Massachusetts is the 11th state to pass a pay transparency law, and it joins several other U.S. states that require salary ranges on job postings. California, Colorado, Hawaii, New York, Washington state, and Washington D.C. all currently require salary ranges on job postings.

Maryland’s updated pay transparency law will take effect Oct. 1, 2024, while Illinois, Minnesota, and Vermont’s laws all take effect in 2025.

Action Items for Massachusetts Employers

Massachusetts’ law applies to employers with 25 or more employees in the state. The legislation requires applicable employers to provide a salary range on all job postings. And the law notes employers must make a “good faith estimate” in producing the salary range, which mirrors recent pay transparency law requirements, including New York City.

The law also applies to internal promotions, transfers, or a new internal role.

Employers that fail to comply with the law are given a warning for the first offense, and then fines escalate to $500 for a second offense and $1,000 for a third offense, plus injunctive/declaratory relief.

Massachusetts’ law goes beyond some of the recent pay transparency laws in that it also has a reporting requirement. Employers with 100 or more employees will be required to share federal EEO reports with the Executive Office of Labor and Workforce Development (EOLWD). Illinois and California’s laws also have similar requirements.

Massachusetts employers that do not currently have a pay transparency strategy in place should move swiftly. You will need to ensure your compensation philosophy is sound ahead of publicly disclosing pay ranges on job postings.

Applicable that operate in the state or are looking to hire talent from the state should prepare accordingly. Action items include:

• Conducting a pay equity analysis. A pay equity analysis will help you understand income disparities and gender pay gaps in your organization. This is made easier by using pay equity analysis software to identify pay inequities.
• Establishing a compensation philosophy. What are the Wage Influencing Factors (WIF) in your organization? Determine what you value and what you pay for, and stick to those principles.
• Evaluate job architecture. Having a well-structured job architecture helps ensure you’re placing employees in the correct job codes. When this is done correctly it informs pay eligibility and drives compensation consistency.
• Determine pay ranges. Doing the preliminary work above will help you establish pay ranges that are equitable internally and externally. Pay equity software tools assist greatly to determine competitive and fair salary ranges by overlaying internal pay equity data with external labor market data.
• Pay data reporting. Ensure you are collecting the necessary pay data and doing a thorough analysis to comply with annual reporting deadlines.

The Pay Transparency Landscape

Pay transparency laws continue to be prevalent in the U.S. and Europe. Massachusetts joins Minnesota, Maryland, and Vermont as states that have passed a required salary range disclosure law in 2024.

Maine, Michigan, and New Jersey have pending bills. Virginia Gov. Glenn Youngkin vetoed a pay transparency bill that state lawmakers sent to his desk on March 14.

California, Colorado, Connecticut, Hawaii, Nevada, New York, Rhode Island, Washington D.C., and Washington all have pay transparency legislation in effect. Maryland’s recently updated law will take effect Oct. 1, 2024, and Illinois’ law takes effect Jan. 1, 2025.

Additionally, pay transparency measures have also been proposed for federal employers by the Biden Administration. And in Europe, members of the EU are preparing for the EU Pay Transparency Directive that will take effect in 2026.

This puts the onus on employers to prepare for a new landscape where pay transparency is both a requirement and an expectation.

Pay Equity at the Center

Pay transparency legislation remains prominent, and it’s feasible that nearly 50% of employees in the U.S. will be covered under pay transparency laws by 2026.

Employers that aren’t moving toward more transparency with their compensation are at risk of being at a competitive disadvantage. Pay transparency is an expectation for Millennial and Gen Z job candidates, with research indicating this group will avoid applying for jobs that don’t include a salary range on the job posting.

Additionally, absent a pay transparency strategy, you limit your available talent pool. With most organizations deploying some version of a dispersed workforce model, you are required to comply with salary range requirements in other states for jobs that can be performed remotely.

The goal of pay transparency laws is to promote practices that lead to a more equitable compensation environment. Similar to salary history ban laws, requiring pay ranges on job postings promotes fair pay practices and holds organizations accountable.

Access Gail Greenfield’s Pay Equity Deep Dive Series

If implemented thoughtfully and strategically by an organization, pay transparency can promote a better work environment where employees believe they are paid fairly. Providing salary ranges on job postings can also positively narrow the applicant pool and improve the hiring experience.

Absent salary range information, a job candidate could go through a multi-week interview process only to discover the job offer is far below their salary expectation. This wastes the candidate’s time and causes financial and reputational damage to the employer.

The task of moving toward full pay transparency can be daunting for an organization. Pay equity software tools alleviate this concern by identifying the root cause of pay disparities and remedying them. Additionally, it supports the creation of equitable, compliant job postings and enables a consistent approach to pay range disclosure.

This empowers your organization to execute compensation plans with complete confidence that pay equity is at the center. And it ensures that you will be prepared to comply and thrive amid evolving pay transparency legislation.