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What is pay transparency?

What is pay transparency?

Pay transparency is when an employer is open and clear about pay for jobs at the organization and why people are paid what they’re paid.

At Salary.com, we care about pay equity. Pay transparency is an important part of understanding and improving pay equity. Our products are designed for HR teams and leaders to compare jobs and compensation and discover and address potential pay gaps. We make is easy to monitor, assess, and understand pay equity inside your organization.

Having a comprehensive view of compensation within an organization and being able to compare jobs, pay, and demographics makes it much easier to maintain pay equity.

When candidates and employees also have a view of pay within the organization, it saves everyone time. People don't apply for jobs they won't take. Current employees can see what others are paid, which helps with planning a career path and retention.  And organizations make sure they are paying everyone fairly, competitively, and in compliance with discrimination laws.
One of the main purposes of pay transparency is to make 
pay gaps between comparable jobs easier to see and correct. Pay transparency is an important aspect of pay equity because it encourages organizations to review their compensation philosophy, strategies, and practices so that everyone is paid fairly.


Types of Pay Transparency

There are degrees of pay transparency. On one end of the spectrum, organizations may disclose pay ranges for groups of jobs or provide information on request. On the other end there is full pay transparency where pay for everyone in the organization is posted where employees can see it, and everyone understands the basis for their pay.

Pay transparency can include disclosure of:

  • Pay for specific jobs
  • Salary ranges for specific jobs
  • Salary ranges for categories of jobs
  • Bonuses and criteria for earning them
  • How salary ranges are determined based on market data and internal criteria
  • Policies and criteria for pay raises
  • Pay philosophy, strategy, and how the organization values work

Before deciding on an approach to pay transparency, it’s important to understand what is required by state and federal laws and determine whether the organization has potential pay gaps and how to address them.

It's a good idea to get your employment lawyers involved in pay equity analysis and pay transparency decisions so you can reduce risk and be confident that your exploration, analysis, and decision-making is confidential.

Pay Transparency Compliance

In the past few years, some states have enacted pay transparency laws that require employers to give candidates and employees information about pay at the organization. All pay transparency laws require employers to at least disclose salary ranges to candidates applying for jobs during the hiring process. In some states, employers disclose on request. In others, they are required to provide the information, usually by the first interview. In Colorado, the salary range for the role must be included even earlier, in the job posting.

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