But federal action is actually not the driver of pay and benefits transparency obligations in the U.S. There is a greater push in the U.S. to be transparent about pay and how pay is largely being driven by action within the states. Transparency requirements have been and are already underway in many states nationwide. More than a dozen states already have pay scale transparency laws currently in effect.

These laws are typically tied to requiring employers to post wage ranges in job postings – with the common thread among these state laws being that pay ranges must be realistic for each role posted. Half of those laws also require employers to also describe the benefits available to the role in the job posting. This is not slowing down. In 2025, five states – Illinois, Massachusetts, New Jersey, Minnesota, and Vermont – will start enforcing pay scale transparency laws and three of those states (Illinois, New Jersey, and Minnesota) require disclosing benefits. 

If the past is prologue, the expected downtick in federal regulation will prompt more states to accelerate this trend. In addition to pay scale transparency, employers should be alert for more laws at the state level that require pay gap reporting. Pay data reporting is already required in California and Illinois. More laws are on the horizon, including a bill under consideration in New York. Also, new requirements for employers to be transparent about how they pay employees are on the horizon. For example, Michigan is already making waves by pushing right to information legislation that, if adopted, would require employers to disclose the average pay for male and female employees in similar roles. 

While pay transparency laws may differ from state to state, it’s clear that the states have taken the reins. In the next year, we'll see more focus on opportunity transparency, pay reporting, and potentially the right to information laws.

Use the EU Pay Transparency Directive as a road map for pay equity regulation in the U.S. 

While the Trump administration might be unlikely to launch any new federal regulation requirements, there’s that elephant in the room: a huge piece of legislation coming from overseas that is expected to impact many U.S. employers. The EU Pay Transparency Directive is the largest piece of pay equity legislation in the world in over 50 years, and, according to recent research, companies are woefully unprepared. 

Many of the Directive’s pay equity and pay transparency obligations will apply to employers with even a single employee in any of 27 countries that are members of the European Union. (Some obligations, like pay gap reporting, will apply to employers with more employees in the EU.) For employers operating in Europe, the Directive introduces significant changes. Pay scale disclosure is on the horizon. Practices like using prior pay to determine starting salaries will no longer be permitted.

Related: Salary transparency: Good for business or bad for morale?

Job titles will need to be gender-neutral, and companies will be required to proactively explain pay structures to employees, including how their pay compares to others in similar roles and the specific criteria for pay increases. Additionally, employers will need to regularly report on gender pay gaps and take concrete steps to close any gaps exceeding 5% that cannot be justified by objective, gender-neutral factors. These are just a few of the many changes introduced by the Directive.

Benefits professionals should be alert that a significant aspect of the EU Pay Transparency Directive is the mandate to include benefits in calculating pay gaps. This requirement underscores the importance of considering total compensation rather than just base salary when assessing pay equity. This means a greater emphasis on evaluating the equity of benefits offerings and ensuring that disparities in benefits don’t contribute to overall pay gaps. This approach could further necessitate a closer examination of benefit utilization patterns across different employee groups and a proactive approach to addressing inequities.

Also, the EU’s Directive is poised to serve as a roadmap for future pay transparency developments in the United States — likely driven by state action during the upcoming administration. 

How employers can prepare

Here are five actions you can take going into 2025 to ensure you are prepared for the changing pay transparency landscape. Three of these will take just minutes:

• Check for benefits gaps: Here’s one you can knock off your to-do list quickly. Quickly connect with the colleague leading your organization's pay equity efforts to see if they're including benefits in their analyses. Benefit disparities can contribute to overall pay gaps, and they are increasingly top-of-mind for regulators, so understanding your current state is crucial. (Time: 10 minutes)
• Review your job postings: Visit your company's career page and check if your job postings include salary ranges and a brief benefits overview. Adding this information can attract a larger and more qualified applicant pool, even if not legally required. (Time: 10 minutes)
• Stay ahead of pay transparency laws: Don't assume the new administration means less focus on pay transparency. Stay informed about the evolving laws in the states where you operate, as they will drive change. For companies in the EU, monitor the implementation of the EU Pay Transparency Directive. Bookmark these trackers: U.S. pay scale transparency laws and EU Pay Transparency Directive transposition tracker. (Time: 3 minutes)
• Centralize pay gap reporting: Evaluate if centralizing your organization's pay gap reporting makes sense, as we are increasingly seeing many employers looking to navigate a complex and changing landscape with stakes that are getting higher. This can help you proactively identify and address pay gaps, ensuring compliance and promoting pay equity.
• Prioritize communication: What we hear the most from employers is angst about how to communicate about pay and pay gaps. It’s one thing to analyze and identify the pay gaps and make adjustments or to share pay and benefits information on job postings — it’s another thing for leaders and managers to be ready to communicate with employees about it. Ensure your team is shoulder-to-shoulder with your comms team so you can prepare to communicate.

Christine Hedrickson is the Vice President of Strategic Initiatives at Syndio, a leader in global pay transparency solutions. She was previously a partner and the global co-chair of the pay equity group at a major law firm. Leveraging over two decades in the legal field, this role allows her to intersect HR analytics with the law, ensuring equity in pay and opportunities.