Pay Transparency Isn’t One-Size-Fits-All—What’s Right for You?

Pay transparency is becoming one of the most important topics in today’s workplace. Driven by new laws, shifting employee expectations, and a growing focus on pay equity, the conversation around pay transparency continues to gain momentum. Some organizations are now fully transparent, while others remain cautious, preferring to keep compensation details confidential. The challenge is finding the right balance—because full transparency isn’t necessarily the right fit for every company.

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At its core, pay transparency refers to openly sharing information about salary ranges and compensation structures with employees and candidates. This can take many forms, from including salary bands in job postings to publicly disclosing individual salaries across an organization. The level of transparency a company adopts can significantly impact workplace culture, employee trust, and talent acquisition.

Levels of Pay Transparency

Organizations operate on a spectrum when it comes to pay transparency. While some are fully open about compensation, others maintain complete confidentiality. Choosing the right level depends on factors such as company readiness, culture, and business strategy. However, as pay transparency laws continue to evolve, organizations may have fewer options and will need to adapt accordingly. 

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Below are common transparency levels we observe, ranging from zero to full transparency, which varies a lot from one organization to another:

How to Determine the Right Level of Pay Transparency for Your Organization

Choosing the right level of pay transparency requires balancing compliance, company culture and readiness, and business strategy. Before making changes, organizations should consider some of the following factors:

• Compliance: Companies in jurisdictions with strict pay transparency laws must comply, while those in less-regulated areas can decide their own approach, keeping in mind that regulations may come sooner rather than later.
• Culture: Organizations that emphasize equity, trust, and open communication may benefit from greater transparency. Others may have employees who value discretion regarding salaries.
• Industry & Talent Strategy: Some industries are moving faster toward transparency to attract top talent, while others with competitive pay structures may need more time and flexibility.
• Readiness: Without clear, structured pay frameworks, transparency can expose inconsistencies and create friction. Companies must be prepared to justify and explain pay decisions in a way that makes sense to employees.

Benefits & Challenges of Pay Transparency

Pay transparency offers significant advantages, but it also presents challenges:

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Benefits:

• Reduces pay gaps by holding employers accountable for fair compensation practices.
• Improves the candidate experience by allowing job seekers to make informed decisions.
• Builds trust and engagement by giving employees clarity on pay structures and career progression, and boosts retention since employees who understand their earning potential are less likely to leave.

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Challenges:

• Managers and HR teams must be prepared to discuss pay decisions transparently and address potential concerns.
• Candidates, especially high performers, may self-select out if they perceive the salary range as too low, even if it’s competitive for the industry or appropriate for the company’s compensation philosophy. This can make it difficult to attract top talent.
• May create pressure to increase compensation beyond what the organization can sustainably afford, especially if employees or candidates expect salaries at the top of the range. This can strain budgets or lead to pay compression issues.

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To determine the best approach and where to fall on the spectrum, organizations should ask:

• What level of transparency aligns with our compensation philosophy, readiness, and business objectives?
• Are we prepared to explain and justify pay decisions to employees?
• How will transparency impact recruitment, retention, and employee morale?

Link Between Pay Transparency & Pay Equity

One of the most compelling reasons to increase pay transparency is its role in addressing pay inequities. Research shows that women and people of color are more likely to be underpaid compared to their white male counterparts. The lack of transparency in salary discussions can contribute to these disparities in several ways:

• Self-valuation bias: When candidates are asked for their salary expectations rather than being offered a range, they’re determining their own worth. Since women and people of color are more likely to have been underpaid in previous roles, they often set lower salary expectations.
• Negotiation disadvantages: Many studies* indicate that these groups are less likely to negotiate salaries or ask for raises. Since salary negotiation often rewards confidence and bargaining skills rather than actual job performance, this perpetuates wage gaps.

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When companies disclose salary ranges and clear criteria for pay increases, they help eliminate bias in compensation decisions. Employees can better understand their earning potential and make informed career decisions. Organizations that prioritize pay equity should consider more transparency as a key tool in ensuring fair compensation practices.

Legal Pressures Driving Pay Transparency

Governments are increasingly mandating pay transparency, making it less of an option and more of a compliance requirement. More than 51% of the U.S. workforce was covered by pay transparency legislation in 2023, and as companies increasingly recruit across borders, these laws will likely shape hiring practices in Canada as well.  

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Here are a few examples of pay transparency laws across the U.S. and Canada: 

• California: Since January 2023, employers with 15 or more employees must include the pay scale for a position in any job posting.
• New York: Since September 2023, employers with 4 or more employees must list salary ranges in job opportunities, promotions, and transfers.
• Colorado: Since January 2024, employers must disclose compensation, benefits, and the application process on job posting.
• Washington: Since January 2023, employers must disclose in each posting for each job opening the wage scale or salary range, and a general description of all of the benefits and other compensation to be offered to the hired applicant.

• British Columbia: Since November 2023, employers have to specify the expected salary or salary range for any publicly advertised job.
• Prince Edward Island: Since June 2022, employers who publish publicly advertised job postings must include information about the expected pay for the positions or the range of expected pay for the positions.
• Ontario:  As of January 2026, employers will have to include information in the publicly advertised job posting about the expected compensation or the range of expected compensation for the position.

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As the momentum behind pay transparency grows, legal compliance is becoming a baseline expectation. More jurisdictions around the world are enacting laws that require employers to disclose compensation details in job postings, promotions, and internal transfers. While the specifics vary by region, the direction is clear: transparency is being legislated.

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For organizations operating in multiple regions or hiring remote talent, navigating these regulations can be complex. It’s no longer enough to apply a one-size-fits-all approach—what’s compliant in one province, state, or country may fall short in another. Employers must stay informed about evolving legislation and be prepared to adjust their pay practices accordingly.

Determining Your Approach to Pay Transparency

Ensuring legal compliance is a critical first step, but it shouldn’t be the only one. Organizations that treat compliance as the floor—not the ceiling—are better positioned to build credibility with employees, reduce risk, and lead with integrity in a shifting landscape.

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Pay transparency is no longer just a trend—it’s becoming a standard expectation. While there is no universal approach, companies must determine what level of transparency best aligns with their culture, industry, readiness, and strategic goals. Starting with smaller steps can be an effective way to navigate this shift, allowing organizations to assess impact, refine their approach, and build confidence over time. 

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Whether fully transparent or taking a more measured approach, the key is to ensure pay structures are fair, well-defined, and justifiable. As legislation evolves and employee expectations shift, organizations that proactively assess and refine their pay transparency policies will be better positioned to build trust, attract talent, and remain compliant.

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Where does your organization currently stand on the transparency scale—and is it time to rethink your approach?

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^{*Gerhart, B., & Rynes, S. (1991). Determinants and consequences of salary negotiations by male and female MBA graduates. Journal of Applied Psychology, 76(2), 256–262; Bowles, H. R., Babcock, L., & Lai, L. (2007). Social incentives for gender differences in the propensity to initiate negotiations: Sometimes it does hurt to ask. Organizational Behavior and Human Decision Processes, 103(1), 84–103.; Riley, H., & Babcock, L. (2007). The costs of asking: Gender and negotiation apprehension. Psychology of Women Quarterly, 31(1), 66–76.; Small, D. A., Gelfand, M., Babcock, L., & Gettman, H. (2007). Who goes to the bargaining table? The influence of gender and framing on the initiation of negotiation. Journal of Personality and Social Psychology, 93(4), 600–613.; Bertrand, M., & Mullainathan, S. (2004). Are Emily and Greg more employable than Lakisha and Jamal? A field experiment on labor market discrimination. American Economic Review, 94(4), 991–1013.}

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