What Talent Leaders Need to Know
Pay transparency is rapidly shifting from a progressive ideal to a legal imperative, yet many misconceptions still cloud the understanding of its true scope and impact. For Talent Acquisition (TA) and TA Operations Leaders, and Recruiters, navigating this evolving landscape is critical not only for compliance but also for attracting top talent and fostering a fair workplace. This blog post debunks five common myths about pay transparency, highlighting the significant risks of non-compliance.
Misconception #1: It’s all about pay ranges
While displaying a salary range is a core component, a narrow focus on just this element is a risky oversight. Pay transparency regulations are increasingly comprehensive, demanding more than just a numerical figure. Many states and municipalities now mandate the disclosure of additional compensation elements and benefits in job postings. To learn more, visit this blog.
For example:
- Washington State’s Equal Pay and Opportunities Act requires employers with 15+ employees to disclose both the wage scale/salary range and a general description of benefits (e.g., healthcare, retirement plans, paid time off, parental leave) and other compensation (e.g., bonuses, commissions, profit sharing, equity incentives). Simply stating “competitive benefits” is insufficient.
- Colorado’s Equal Pay for Equal Work Act mandates a general description of all employment benefits (healthcare, retirement, paid days off, paid leave, and any other benefits reportable for federal tax purposes), in addition to compensation.
- New Jersey’s Pay and Benefit Transparency Act, effective June 1, 2025, similarly requires a general description of benefits and “any other compensation programs” for which an employee would be eligible.
The Risk: Failing to include these details can lead to compliance violations, investigations by labor departments, and legal challenges. This oversight not only risks fines but also leaves candidates ill-informed, potentially deterring strong applicants who value a complete compensation picture.
Misconception #2: The fines are small and meaningless
Fines may start small, but they can quickly add up to substantial financial penalties and incalculable reputational damage. The era of minor wrist-slap fines is over; enforcement is becoming increasingly aggressive.
- Colorado employers face fines ranging from $500 to $10,000 per violation under its Equal Pay for Equal Work Act.
- While exact recent public fine amounts for New York City aren’t always publicized, the NYC Commission on Human Rights actively investigates non-compliance.
- California’s Pay Transparency Act (SB 1162) can levy civil penalties between $100 and $10,000 per violation for failure to disclose pay scales in job postings or provide them upon request to current employees.
- Washington State laws include a private cause of action for $5,000 per job applicant for violations, meaning individuals can sue directly.
Beyond the direct monetary fines, companies incur significant costs related to:
- Legal Fees: Defending against lawsuits or investigations can be lengthy and expensive.
- Administrative Burden: The countless hours spent preparing audit materials, responding to inquiries, and revising job postings divert critical HR and legal resources.
- Brand Damage: Non-compliance signals a lack of transparency and commitment to equitable practices, severely eroding candidate trust and employer brand. This can make it harder to attract top talent and retain existing employees, leading to higher recruitment costs and productivity losses.
The Risk: Companies found to be in non-compliance find themselves not only facing monetary fines, but also the effort to comply with required audits, and the risk of public disclosure.
Misconception #3: Compliance is applicable only to states and regions
While states and regions may be more well-known, many cities actually raced ahead in establishing their own regulations first. The pay transparency landscape is highly fragmented, with many individual cities and municipalities enacting their own regulations, often running parallel to or even predating state laws.
- While Colorado and Washington have statewide laws, significant cities like New York City, Jersey City (NJ), and Cleveland, OH have their own specific ordinances.
- Cleveland’s ordinance, effective October 27, 2025, applies to private employers with 15+ employees within the city. Ohio does not have its own state-wide regulation.
- Jersey City’s ordinance (effective June 1, 2025, alongside the statewide NJ law) also has its own stipulations.
The Risk: Operating under the assumption that state-level compliance is sufficient leaves companies vulnerable to violations in major metropolitan areas where a significant portion of their talent pool resides. Ignoring local ordinances can result in unexpected fines and legal challenges from local enforcement agencies.
Misconception #4: A number in the job ad is enough
Simply putting any number or range in a job advertisement is often insufficient and can still lead to violations. Most jurisdictions are enforcing a “good faith” pay range requirement, meaning the range must be a reasonable and realistic estimate of the compensation for the role at the time of posting.
Examples of “bad faith” ranges that have been cited for non-compliance or raised concerns include:
- Extremely broad ranges, such as “$18 to $48 an hour” or even “$15,000 to $225,000 a year.” Such wide gaps suggest the employer hasn’t genuinely considered the expected pay for the role.
- Ranges that omit an upper or lower bound, like “up to $35.00 per hour” or “$70,000 per year and up.” Both Colorado and New Jersey guidance explicitly state that ranges must have clear starting and ending points.
The Risk: Providing non-compliant or “bad faith” ranges can trigger investigations and fines, as regulatory bodies view these as attempts to circumvent the spirit of the law. Beyond compliance, such ranges can frustrate candidates, making them question the company’s transparency and potentially leading them to apply elsewhere, thus increasing time-to-hire and cost-per-hire.
Misconception #5: Pay transparency only applies to your careers page
The reach of pay transparency regulations extends far beyond a company’s own careers page. Most jurisdictions are enforcing these rules on popular third-party job boards and recruitment platforms like Indeed and LinkedIn.
- Indeed, for example, has indicated that for jobs posted in New York City, if salary information isn’t provided by the employer, the job listing will be “set to Nowhere,” meaning its visibility to job seekers will be blocked to ensure compliance.
- Similarly, California’s SB 1162 explicitly states that the pay scale must be included in any job posting for positions that might be filled in California, including those published by a third party.
The Risk: Relying solely on compliance for internal career sites ignores a vast portion of where candidates discover job opportunities. Non-compliance on external platforms can lead to:
- Visibility Suppression: Job boards may actively hide or demote non-compliant listings, drastically reducing applicant flow.
- Fines & Legal Action: As seen with Washington’s private cause of action, direct fines or lawsuits can arise from non-compliant postings on any platform.
- Missed Talent: High-quality candidates may bypass listings that lack transparency on their preferred job search sites, assuming the company is either non-compliant or not genuinely committed to fair pay.
Proactive compliance is a catalyst
The evolving landscape of pay transparency demands diligence and proactive measures from TA and TA Ops Leaders and Recruiters. Understanding and addressing these common misconceptions is an important step toward building a compliant, effective, and inclusive hiring process. By embracing genuine transparency across all aspects of compensation disclosure and all platforms, companies can not only avoid costly penalties and legal entanglements and strengthen their employer brand, attract diverse, high-quality talent, and foster a culture of trust and fairness.
For more in-depth information and ongoing updates on evolving pay transparency regulations, consult reputable legal counsel and trusted HR technology partners like Datapeople, who help ensure your job posts align with the latest requirements. To jumpstart, we recently hosted a workshop covering What You Need to Know About Changing Hiring Regulations.