Pay transparency is coming to Minnesota in 2025, as Gov. Tim Walz signed a pay transparency bill into law on May 17. The law (SF 3852 ) will require employers with 30 or more employees to provide salary ranges on job postings beginning Jan. 1, 2025.
Minnesota now joins several other U.S. states that require salary ranges on job postings. California, Colorado , Hawaii, Illinois, New York, and Washington state, all have salary range requirements on job postings. Maryland’s updated pay transparency law will take effect Oct. 1, 2024.
Action Items for Minnesota Employers
Organizations with 30 or more employees performing work in Minnesota will need to comply with the new pay transparency legislation. The law builds on Minnesota’s salary history ban requirement that took effect Jan. 1 of this year.
The legislation requires applicable employers to provide a salary range on all job postings. And the law notes employers must make a “good faith estimate” in producing the salary range, which mirrors recent pay transparency law requirements, including New York City .
Prevent Pay Inequity by Ensuring Fair and Competitive Pay at the Time of Hire
Minnesota employers that do not currently have a pay transparency strategy in place should move swiftly. You will need to ensure your compensation philosophy is sound ahead of publicly disclosing pay ranges on job postings.
Employers that operate in the state or are looking to hire talent from the state should prepare accordingly. Action items include:
- Conducting a pay equity analysis. A pay equity analysis will help you understand income disparities and gender pay gaps in your organization. This is made easier by using pay equity analysis software to identify pay inequities.
- Establishing a compensation philosophy. What are the Wage Influencing Factors (WIF) in your organization? Determine what you value and what you pay for, and stick to those principles.
- Evaluate job architecture . Having a well-structured job architecture helps ensure you’re placing employees in the correct job codes. When this is done correctly it informs pay eligibility and drives compensation consistency.
- Determine pay ranges. Doing the preliminary work above will help you establish pay ranges that are equitable internally and externally. Pay equity software tools assist greatly to determine competitive and fair salary ranges by overlaying internal pay equity data with external labor market data.
The Pay Transparency Landscape
Pay transparency laws continue to be prevalent in the U.S. and Europe. Hawaii, Illinois and Maryland are the latest states to enact pay transparency laws. Illinois’ law takes effect Jan 1, 2025 as well.
Massachusetts is poised to become the next state to pass a pay transparency law, and Maine, Michigan, and New Jersey have pending bills. Virginia Gov. Glenn Youngkin vetoed a pay transparency bill that state lawmakers sent to his desk on March 14.
Washington D.C.’s law will go into effect on June 30. California, Colorado, Connecticut, Hawaii, Maryland, Nevada, New York, Rhode Island, and Washington all have pay transparency legislation in effect.
Learn More About Pay Data Compliance
Additionally, pay transparency measures have also been proposed for federal employers by the Biden Administration. And in Europe, members of the EU are preparing for the EU Pay Transparency Directive that will take effect in 2026.
This puts the onus on employers to prepare for a new landscape where pay transparency is both a requirement and an expectation.
Pay Equity at the Center
Pay transparency legislation remains prominent, and it’s feasible that nearly 50% of employees in the U.S. will be covered under pay transparency laws by 2026.
Employers that aren’t moving toward more transparency with their compensation are at risk of being at a competitive disadvantage. Pay transparency is an expectation for Millennial and Gen Z job candidates, with research indicating this group will avoid applying for jobs that don’t include a salary range on the job posting.
Additionally, absent a pay transparency strategy, you limit your available talent pool. With most organizations deploying some version of a dispersed workforce model, you are required to comply with salary range requirements in other states for jobs that can be performed remotely.
The goal of pay transparency laws is to promote practices that lead to a more equitable compensation environment. Similar to salary history ban laws, requiring pay ranges on job postings promotes fair pay practices and holds organizations accountable.
If implemented thoughtfully and strategically by an organization, pay transparency can promote a better work environment where employees believe they are paid fairly. Providing salary ranges on job postings can also positively narrow the applicant pool and improve the hiring experience.
Absent salary range information, a job candidate could go through a multi-week interview process only to discover the job offer is far below their salary expectation. This wastes the candidate’s time and causes financial and reputational damage to the employer.
The task of moving toward full pay transparency can be daunting for an organization. Pay equity software tools alleviate this concern by identifying the root cause of pay disparities and remedying them. Additionally, it supports the creation of equitable, compliant job postings and enables a consistent approach to pay range disclosure.
This empowers your organization to execute compensation plans with complete confidence that pay equity is at the center. And it ensures that you will be prepared to comply and thrive amid evolving pay transparency legislation.
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