Employee compensation plays a major role in employee satisfaction, engagement, and retention. If not managed carefully, compensation can also be a source of inequality and frustration. This is where pay equity analysis comes into play. A pay equity analysis is a review of an organization’s compensation practices, focused on identifying and addressing any disparities in pay between employees performing similar work.  

Pay transparency continues to be a significant and growing trend in the workplace. Legislation and public demand have also increased related to companies disclosing salary information, so initiatives around pay equity, fairness, and trust are a top priority for Human Resources. Pay transparency initiatives present an opportunity to cultivate a culture of openness, equity and trust, but it also brings about challenges that need to be carefully addressed. 

Standing up a pay equity and fair pay program can feel like navigating a labyrinth of data, policies, and entrenched practices. You face the daunting task of balancing budget constraints, regulatory compliance, and the urgent need to attract and retain top talent. All the while, you know that unaddressed pay inequities can erode employee trust, fuel turnover, and tarnish your company’s reputation.

Pay transparency laws are on the rise in the United States.  Colorado led the charge on this initiative by implementing the first pay transparency state law in 2019 and many other states have followed since. While pay and salary was once considered a topic no one discussed, it is now gaining traction and requiring employers to be upfront and honest in job listings when it comes to disclosing salary ranges and benefits.

If recent federal changes have you questioning pay equity’s importance, consider this: states are stepping up enforcement, and your employees are watching. In 2025, staying proactive is key. 

Not only that, but under the federal Equal Pay Act of 1963 and Title VII of the Civil Rights Act,employers are prohibited from pay discrimination on the basis of sex, gender, race, or ethnicity. These two laws work together and require that any pay differences are justified by legitimate, non-discriminatory factors such as merit, seniority, quantity or quality of work, or a factor other than sex and race.

Starting in 2025, a significant aspect of the "Frances Perkins Workplace Equity Act" requires employers to submit annual compensation reports to the Commonwealth of Massachusetts. This process will occur via its online portal, which is now live. On July 31, 2024, Massachusetts Governor Maura Healey enacted this legislation, which introduces new requirements for pay transparency and workforce data reporting. These initiatives are designed to enhance workplace equity and offer deeper insights into workforce demographics. An updated FAQ has been published on the Mass.gov website, offering clearer guidance on the expectations for annual reporting for Massachusetts pay data.

On July 31, 2024, Massachusetts Governor Maura Healey signed the "Frances Perkins Workplace Equity Act," a significant step towards pay transparency in the state. This new legislation imposes crucial requirements on employers, aimed at promoting fair pay practices and reducing wage disparities.

In a landmark move, the Massachusetts legislature has passed a significant bill promising to bring a new level of transparency to the hiring process. The bill, known as an Act Relative to Salary Range Transparency, requires employers with 25 or more employees to disclose salary ranges when posting job positions. This legislation is set to make Massachusetts the eleventh state to mandate such pay transparency, a step that many believe will help close the gender and racial wage gap.

We've made it easy for you to navigate what steps to take: skip right to Actions Massachusetts Employers Should Take Now

As an HR leader, embarking on the pay equity journey isn't just a regulatory obligation — it's an opportunity to align your human resources practices with your organization's deepest values of fairness and transparency. This journey will challenge you to scrutinize and refine your compensation strategies, ensuring that every employee's pay is not only compliant with the law but is also a true reflection of their value and contribution to the company.

Pay transparency laws continue to gain traction in the United States as a measure to address the persistent gender pay gap and promote fair compensation. By shedding light on compensation practices, pay transparency empowers employees to make informed career decisions and encourages employers to conduct fair and equitable pay practices. Many employers are also adopting the principles of pay transparency for strategic reasons, as a way to strengthen and differentiate their talent practices.