Pay Transparency and Compensation Equity 

As the workplace evolves, conversations about fair pay, salary disclosure and equitable compensation practices are part of everyday business life. Laws requiring pay transparency are emerging across the country, and even in states without mandates, employees increasingly expect openness about how salaries are determined.

Understanding Pay Transparency

Pay transparency refers to the practice of openly sharing compensation information. This might include disclosing pay ranges in job postings, communicating how pay decisions are made or giving employees access to salary data by role or department. While once considered optional, transparency is now quickly becoming a compliance issue.

Several states have enacted pay transparency laws requiring employers to list salary ranges in job descriptions or provide them upon request. Some laws also protect employees’ rights to discuss pay without retaliation.

Compensation Equity

Pay transparency and compensation equity go hand in hand. Equity means employees are paid fairly for equal or comparable work, regardless of protected characteristics. Transparency allows employees and regulators to see whether compensation practices support or contradict that principle.

Proactively addressing pay equity can improve workplace culture, strengthen your company’s reputation and help reduce turnover.

Why It Matters

Many employers don’t immediately associate pay transparency with insurance, but it’s a growing factor in employment practices liability (EPL) risk. EPL coverage can help cover claims related to wrongful termination, discrimination and other employment-related issues. As more employees become aware of their rights, claims alleging unequal pay or retaliation over pay discussions could increase.

Reviewing your coverage now, before an issue arises, can help ensure your business has appropriate coverage. Our agents can explain what your current policy covers and how to fill any gaps.

Contact Lyceum Insurance Services today to learn more.

This blog is intended for informational and educational use only. It is not exhaustive and should not be construed as legal advice. Please contact your insurance professional for further information.