New 2025 Pay Transparency Laws: What Employers Need To Know

Pay transparency continues to gain momentum nationwide as several states enact legislation aimed at fostering fairness and equity in the workplace. Following this trend, New Jersey Governor Phil Murphy recently signed Senate Bill 2310 (S2310) into law, requiring employers to disclose pay ranges and benefits in job postings and promotional opportunities. This law takes effect on June 1, 2025, joining similar legislation in Illinois, Massachusetts, Minnesota, and Vermont. Employers operating in these states must prepare now to ensure compliance with the evolving regulatory landscape.

New Jersey's Pay Transparency Law

New Jersey's S2310 applies to employers with at least ten employees over 20 calendar weeks who conduct business, employ workers, or accept applications in the state. Key provisions include:

• Job Posting Disclosures: Employers must include the hourly wage or salary-or a range-in all postings for new positions or transfer opportunities, whether advertised internally or externally. A general description of benefits and compensation programs must also be provided.

• Promotion Notifications: Employers must make reasonable efforts to notify employees of promotional opportunities before making an employment decision, except when promotions are based on seniority or performance.

• Temporary Employment Exemptions: Temporary help service firms and consulting firms are not required to disclose pay and benefits for speculative future openings but must provide this information for specific job openings during interviews or at the time of hire.

• Penalties for Non-Compliance: Violations carry civil penalties of $300 for the first violation and $600 for subsequent violations.

Pay Transparency Laws in Other States Effective in 2025

Illinois

Effective January 1, 2025, Illinois' pay transparency law applies to employers with 15 or more employees. Key provisions include:

• Disclosure Requirements: Employers must include wage or salary ranges and a general description of benefits, such as bonuses, stock options, and incentives, in job postings.

• Promotion Notifications: Employers must notify current employees of promotional opportunities no later than 14 calendar days after posting externally.

This law aligns with Illinois' broader efforts to address pay equity and enhance transparency.

Massachusetts

On July 31, 2024, Massachusetts Governor Maura Healey signed comprehensive salary range transparency legislation into law. The statute introduces salary disclosure requirements and additional reporting obligations for larger employers.

Effective Dates:

• Salary Disclosure Requirements: Take effect October 29, 2025.

• EEO and Pay Data Reporting: Employers with 100 or more Massachusetts employees must submit demographic and pay data annually, starting February 1, 2025.

Key Requirements:

• Employers with 25 or more employees must include pay ranges in all job postings, disclose pay ranges for internal promotions or transfers, and provide pay range information upon request. Unlike laws in some other states, the Massachusetts statute does not require employers to disclose bonuses or additional benefits in job postings.

• Reporting obligations include submitting workforce demographic and pay data categorized by race, ethnicity, sex, and job category. A properly completed federal EEO-1 Employer Information Report will satisfy the filing requirement. Aggregated data will be published annually by the Massachusetts Department of Labor.

Massachusetts' reporting requirements distinguish it from other states by providing greater visibility into workforce demographics while safeguarding individual employer data.

Minnesota

Effective January 1, 2025, Minnesota's pay transparency law applies to employers with 30 or more employees within the state, limiting its scope to positions performed locally. Key provisions include:

• Salary Range Requirements: Employers must disclose starting salary ranges and a general description of benefits for job openings. Fixed pay rates, if applicable, must also be included.

• Specificity: Salary ranges cannot be open-ended, ensuring candidates receive clear expectations about compensation.

Minnesota's localized approach emphasizes fairness in hiring practices while requiring adjustments to disclosure processes.

Vermont

Starting July 1, 2025, Vermont's pay transparency law applies to employers with five or more employees. Key provisions include:

• Compensation Disclosures: Employers must include the compensation or range of compensation in job advertisements. Commission-based roles must disclose the commission structure, and tipped roles must disclose hourly wages exclusive of tips.

• Wide Applicability: The law applies to all businesses, organizations, and governmental entities operating in Vermont, including remote positions tied to a Vermont office.

• Exemptions: General announcements and verbal advertisements are excluded.

Employers should assess their practices now to meet Vermont's wide-reaching pay transparency requirements by the law's effective date.

Preparing for Compliance

Employers operating in these states should act now to align their practices with the new laws. Key steps include:

1. Conduct a Pay Equity Audit: Review compensation structures to identify and resolve disparities before the new laws take effect.

2. Update Job Posting Templates: Ensure job postings include required disclosures such as salary ranges, benefits, and other compensation.

3. Streamline Promotion Notification Processes: Establish policies for notifying employees about promotional opportunities, ensuring compliance with transparency requirements.

4. Train HR and Recruitment Teams: Educate staff on determining pay ranges, communicating compensation information effectively, and adhering to state-specific requirements.

5. Monitor Multistate Compliance: Develop a strategy for managing varying pay transparency laws across jurisdictions. Stay informed about legislative updates to maintain compliance.

Parting Thoughts

The wave of pay transparency laws taking effect in 2025 reflects a growing commitment to workplace equity and accountability. Employers should act quickly to align their policies with these new requirements, updating job postings, defining pay ranges, and training HR teams. Staying informed about evolving laws will be critical for maintaining compliance and avoiding penalties.

Release Date: November 27, 2024