What Pay Transparency Means for the Workplace — and Why it Matters

The pay transparency movement is reshaping the modern workplace. With 15 states and Washington, D.C. now mandating salary disclosure to employees and job candidates, companies are being called to confront a long-standing source of inequity: the secrecy surrounding employee compensation.

For decades, that secrecy has limited the economic potential of women and people of color. But as pay transparency becomes more common, businesses are discovering that fairness isn’t just a moral obligation — it’s also good for their bottom lines.  

Pay transparency is one of the most direct ways to reduce income inequality, says Yaro Fong-Olivares, executive director of Bentley’s Center for Women and Business. The gender wage gap remains a significant obstacle for women in the workforce today: American women earn just 83 cents for every dollar earned by their male peers, with even greater disparities for women of color.  

Federal laws prohibit gender-based wage discrimination, but companies that encourage pay secrecy make it difficult for women to identify and challenge unfair compensation.

Studies show that pay transparency laws change that. For example, researchers discovered that a 2018 law passed in the United Kingdom narrowed the gender pay gap by 19%. Another study of public universities in Canada found that salary disclosure laws reduced the gap between female and male faculty members by 20-40%.

“When compensation data becomes public, it levels the playing field and creates accountability across the organization,” says Fong-Olivares. “It forces companies to take a closer look at how inequities emerge in the first place — and take steps to eliminate both conscious and unconscious hiring biases.”

Brandon Smit, associate professor of Management, understands why companies might equate pay transparency mandates with opening Pandora’s box. “Employers worry that revealing salary information will create tension among employees or prompt widespread demands for pay adjustments,” he explains. 

These concerns underscore the importance of sharing not just what employees are paid, but how pay decisions are made, he says. In workplaces where salary discussions are discouraged or even prohibited, secrecy can erode trust — especially when employees perceive inequities but lack the ability to confirm or address them. 

To counter this, companies need to ensure that conversations about compensation are clear, consistent and link pay progression with performance outcomes. Doing so fosters a more open and collaborative culture, Smit says, where conversations about performance and growth can happen more productively. Ensuring that pay is determined by merit, not through favoritism or negotiation, also boosts morale and reduces turnover.  

As Smit observes, “When employees understand why they’re compensated the way they are, they’re more likely to see the system as fair — even if they wish they were earning more.” 

This perception of fairness doesn’t just influence internal culture — it can also enhance a company’s reputation. “Companies that openly share compensation data are often perceived as more ethical and socially responsible,” says Hannah Weiser, assistant professor of Law.  

In an increasingly competitive job market, these attributes help companies attract top talent. Including salary information in job postings increases both the quality and diversity of applicants by attracting candidates who want to work at organizations that value equity and inclusivity. It also streamlines the recruitment process by ensuring that companies’ and candidates’ pay expectations are aligned from the outset.  

Pay transparency is also important to consumers, who see it as part of a company’s broader commitment to ethical and sustainable business practices. According to the 2025 Bentley-Gallup Business in Society report, 65% of Americans believe businesses have a positive impact on people’s lives. More specifically: 

•  96% of survey respondents expect companies to provide workers with high-quality health care benefits 

• 95% think companies should have a responsibility to improve their communities  

• 91% believe companies should operate in ways that protect the environment 

As Weiser notes, “When companies make compensation practices visible and equitable, it builds credibility — and consumers notice.” 

With pay transparency gaining ground nationwide, she believes legal mandates are inevitable — and companies that act now will be better prepared than those that wait. 

After all, committing to equitable compensation practices benefits all stakeholders: When employees trust that their pay is fair, they’re more engaged and productive. When candidates view a company as honest and accountable, they’re more likely to want to work there. And when consumers perceive a company as equitable, they’re more likely to support it. 

“Organizations that embrace pay transparency aren’t just complying with regulations. They’re investing in their workforce,” Weiser explains. “Fostering trust, equity and accountability positions companies better for long-term success. That’s not just good ethics — it’s good business.”