What U.S. employers need to know about the dynamic pay transparency landscape

With the EU Pay Transparency Directive’s June 6 deadline looming (the EU Commission confirmed prior to the end of 2025 that the Directive isn’t being delayed), many employers are focused on preparing for increased pay transparency among their European workforce.

However, it is important to remember your U.S. employee segments because of new pay equity and transparency laws that were enacted in 2025.

Transparency laws continue to spread

Pay transparency has been a gradual evolution in the United States, ever since Colorado’s pay transparency law in 2021. In 2025, laws were enacted at the state and city level with new requirements in Ohio for Cleveland and Columbus, New York City, Delaware and California.

Several laws apply to remote jobs, even if the employer is not physically located in the jurisdiction. For example, Illinois and Massachusetts include considerations for remote workers in their requirements. Employers who have a compliance-focused pay transparency strategy should review job posting templates and applicant tracking systems to ensure compliance across all locations.

Several proposed laws go beyond job postings. Michigan and Pennsylvania introduced bills at the start of their 2025-2026 sessions that would require employers to share pay ranges with employees. Pennsylvania’s bill includes provisions to share the employee’s own pay range and the pay ranges for similarly situated jobs. Michigan’s proposal takes transparency even further by requiring wage information for similarly situated employees covering a period of up to three years prior to the request.

Michigan and Pennsylvania’s provisions might sound familiar because the EU Pay Transparency Directive also has similar requirements regarding the sharing of pay levels and average pay by category of workers. Michigan’s proposed legislation takes it a step further, however, in sharing pay information by gender and seniority. This means employers need accurate, up-to-date job architectures, leveling frameworks, pay structures and clear processes for responding to employee inquiries.

New York City adds another layer

On Dec. 4, 2025, The New York City Council voted to override Mayor Eric Adams’s vetoes of two bills — Int. 982-A and Int. 984-A — requiring annual pay reporting and pay analyses.

These measures mandate that large employers submit annual reports detailing pay data by race, ethnicity and gender, modeled after the former federal EEO-1 Component 2 reports. The submitted data will enable the city to conduct annual pay equity audits.

Pay data reporting requirements (Int. 982-A)

• Who is covered: Private employers with 200 or more employees working in New York City.
• What is required: Annual submission of pay data reports.
• Data: Reports will be modeled after the former federal EEO-1 Component 2 pay data reports (2017-2018 framework) and likely will require W-2 wage information and total hours worked, categorized by race, ethnicity and gender within specified pay bands. The designated city agency has the discretion to modify the reporting structure.
• Anonymity and compliance: Employers may submit the data component anonymously but must separately submit a signed statement identifying the employer and confirming data accuracy.
• Penalties: Noncompliant employers will be publicly listed after a 30-day notice period. Fines start at $1,000 for the first offense and $5,000 for subsequent offenses.

Citywide pay equity study (Int. 984-A)

• Requirement: Directs a designated city agency to conduct an annual pay equity study using the aggregate data submitted by employers.
• Goal: Assess disparities in compensation based on race, ethnicity and gender across the city.
• Outcome: The agency will publish recommendations for employer action plans to address identified disparities and publicize aggregated data (without revealing the specific employer or identifying information).

Implementation and timeline

• While the law is now in effect, reporting deadlines are phased and depend on agency action.
• The mayor must designate a responsible agency by Dec. 4, 2026, and the designated agency has up to 12 months to create the standardized reporting format and procedures.
• Employer reporting deadlines will kick in within 12 months after the standardized form is published, and annually thereafter.

Key takeaways

Internal pay practices are under increasing scrutiny. Employers who take a proactive approach will not only reduce compliance risk but also strengthen their pay and talent strategy. The message is clear: Pay transparency is becoming the norm, not the exception. The same steps organizations have taken to prepare for the EU Pay Transparency Directive are equally critical for U.S. employers:

• Validate job and pay structures: Ensure job architectures, leveling frameworks, and pay structures are accurate and up to date.
• Update internal policies: Establish clear guidelines for managing pay and create processes to respond effectively to employee pay inquiries.
• Plan for future reporting: With pay reporting requirements already in place in California and Illinois — and upcoming in NYC — pay reporting is likely to expand. Conduct equal pay, pay gap and pay driver analyses to identify and address risk areas. Investigate both individual employees and groups identified as outliers.

Finally, develop a plan for a regular cadence of these activities. This is not a one-time exercise. Monitor and adapt to the changing regulations emerging across U.S. markets. Employers who embed these processes now will find it far easier to adapt to their evolving local requirements than those who wait until mandated by law.

Author

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Mariann Madden

North America Pay Equity Co-Lead

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