Massachusetts, Minnesota, New Jersey and Vermont have each enacted pay transparency laws which are effective in 2025 and Illinois amended its Equal Pay Act to include pay transparency requirements effective as of January 1, 2025. Enactment of pay transparency laws and equal pay laws is trending across the nation, as a means for states to address the ongoing concern of gender and minority-based pay disparities.
For example, Massachusetts’ Pay Transparency requires employers to disclose pay ranges in job postings.The Massachusetts Equal Pay law permits employees to establish a prima facie case of pay discrimination by comparing their pay to the pay of an employee of a different gender who is performing “comparable work.” Once a pay disparity is uncovered, an employer cannot use an employee’s salary history as a defense to the disparity. The Massachusetts Equal Pay law requires that the employer must be then able to explain the disparity on the basis of seniority, production, sales or revenue-based earnings, experience or training, merit, travel obligations, or job location.
Generally, pay transparency laws require covered employers to disclose salary or wage ranges in new job postings. In addition to disclosing salary or wage ranges, some states also require employers to include information on employee benefits and other forms of compensation beyond base pay—such as stock options or bonuses.
There are other variations between each state law that employers must be aware of. For example, under Illinois law, an employer is required to alert current employees of a new job posting when the new position would create a promotional opportunity for current employees. The employer must announce this new position opportunity within 14 days of posting an external advertisement for the position. Similarly, under New Jersey’s law, employers must make “reasonable efforts” to announce, post, or otherwise make known to current employees promotional opportunities, which must meet disclosure requirements.
Notably, Vermont’s law distinguishes between commission and non-commission-based work. The law does not require disclosure of a compensation range for commission-based work. The law only requires that the job posting disclose the role’s commission structure. For non-commission-based work, however, a job posting must include general pay disclosures regarding the compensation or compensation range for the new position.
Employers, especially those operating across several states, must ensure compliance with each state’s varying requirements under these new laws. Employers that fail to meet disclosure requirements may be subject to financial penalties.
