Compensation and pay transparency refer to organizational and policy practices that make information about employee compensation—such as pay ranges, benefits, and total rewards—visible and accessible to workers and job seekers. These practices aim to promote fairness, reduce wage gaps, and enhance trust in workplace practices.

Pay transparency refers to the practice of openly sharing information about employee compensation, often including salaries, wage ranges, benefits, and sometimes bonus structures. This can occur at different levels—from posting salary ranges in job descriptions to making all employee pay public within an organization. The purpose of pay transparency is to promote fairness and equity in pay, reduce wage gaps (e.g., gender or racial disparities), increase trust and clarity in hiring and promotion practices, and help employees better understand how compensation decisions are made. While pay transparency can improve trust and retention, it also requires careful communication and consistent pay practices to prevent misunderstandings or employee dissatisfaction.

A related term (a subset of pay transparency) is compensation transparency which is generally considered an alternate term for pay transparency but can carry a slightly broader meaning. Pay transparency usually focuses on wages and salary ranges, sometimes including bonuses or commissions. Compensation transparency typically encompasses the entire compensation package—salary or wages plus benefits, incentives, retirement contributions, stock options, allowances, and other perks. An employer practicing full compensation transparency would disclose not only what people earn in base pay, but also the monetary value of the total rewards package. The purpose of compensation transparency is to provide employees with a holistic understanding of their total compensation package, support informed career and financial decisions, and encourage alignment between compensation philosophy and organizational values.

There are no federal laws mandating pay or compensation transparency. However, a growing number of state and local jurisdictions have enacted laws primarily focused on pay transparency, requiring employers to disclose salary ranges in job postings or upon request, and in many cases prohibiting questions about salary history. Examples of state laws in effect include:

• New Jersey - The Pay and Benefit Transparency Act took effect June 1, 2025, requiring employers with 10+ employees over 20 weeks to include salary (or range), benefits, and other compensation details in job postings—and to notify current employees of internal promotions
• Illinois – Since January 1, 2025, employers with 15+ employees must disclose salary ranges and benefit descriptions in job postings
• Minnesota - A law signed by the governor mandates that employers with more than 30 employees include salary ranges and a general description of benefits in job postings, effective January 1, 2025.