Minnesota’s new Pay Transparency Law is officially in place as of January 1, 2025. These regulations aim to create greater equity and transparency in the hiring process, making it essential for employers to stay informed and adapt their practices.
In this article, our employment experts at Doherty Staffing Solutions (Doherty) share more about the Pay Transparency Law, the key requirements for employers under this law, compliance best practices, and more!
Understanding Minnesota’s New Pay Transparency Law
Governor Tim Walz signed a pay transparency bill into law on May 17, 2024, which officially went into effect on January 1, 2025. This law requires all Minnesota employers with 30 or more employees to disclose salary ranges on job postings. In addition to a salary range, employers are also required to provide benefits information.
Minnesota is one of 14 states to implement a pay transparency law, joining a larger legislative movement across the United States to address wage gaps and ensure that employees have a clearer understanding of their potential earnings. These laws’ primary goals are to prevent wage discrimination and foster a more inclusive work environment. By making salary information more accessible, Minnesota aims to empower employees with the knowledge needed to make informed career decisions and negotiate fair pay.
Key Requirements for Employers Under the New Law
Employers in Minnesota must adhere to all requirements under the new Pay Transparency Law. Job postings must include pay information that discloses a “good faith estimate” of the role’s salary range. Under the new law, “salary range” is defined as the minimum and maximum annual salary or hourly range of compensation. An open-ended salary range is prohibited under the law. Employers also have the flexibility to post a fixed pay rate, if they do not intend to offer a salary range.
Employers are required to include a general description of the benefits they offer, including but not limited to additional compensation (e.g., commissions, bonuses, or stock options), health insurance, and retirement plans.
Under this law, a job posting is defined as any promotional recruitment materials, so pay transparency requirements extend to social media posts, flyers, or any other digital or hard copy material that includes a job description and qualifications. This also applies to job postings that may occur if your business utilizes staffing agency services or third-party job boards (such as Indeed, LinkedIn, ZipRecruiter, etc.), so it is critical to ensure that all necessary information is included to remain in compliance.
The Risks of Non-compliance
The Minnesota Department of Labor and Industry has not yet specified legal consequences for non-compliance under this law but has the authority to investigate and enforce it. Generally, non-compliance may lead to legal penalties, including fines and sanctions, which can be financially burdensome. Additionally, employers may face reputational damage if they are found to be violating the law, potentially impacting their ability to attract and retain top talent.
Employees who feel they are not being fairly compensated may also pursue legal action, which can lead to costly litigation and further damage to the employer’s reputation. To avoid these risks, it is crucial for employers to understand and adhere to these new requirements.
Benefits of Pay Transparency for Organizations
While complying with Pay Transparency Laws may seem challenging, organizations that embrace these changes can reap numerous benefits. Transparent salary practices can increase employee trust and satisfaction, as employees feel more valued and fairly compensated. This can result in higher employee morale and reduced turnover rates.
Salary transparency can also enhance an organization’s reputation as an equitable employer, making it more attractive to potential hires. By promoting fairness and equity, employers can build a positive workplace culture that supports diversity and inclusion.
Best Practices for Ensuring Compliance with Pay Transparency
To ensure compliance with Minnesota’s Pay Transparency Law, employers should consider implementing several best practices.
Conduct a thorough review of current compensation policies and practices to identify any areas that need updating.
Ensure that job postings include the required information for both salary ranges and benefits.
Train Human Resources (HR) staff and hiring managers on the new requirements and the importance of pay transparency.
Conduct regular audits and record-keeping to help maintain compliance and identify any potential issues early on.
Ensure third-party vendors are compliant to avoid liability.
By following these best practices, businesses can mitigate the risks associated with non-compliance with the new salary transparency regulations.
Advantages of Partnering with a Compliant Staffing Firm
Partnering with a staffing firm that understands and adheres to salary transparency laws can provide significant benefits for employers. A compliant staffing firm can help navigate the complexities of the new regulations, ensuring that job postings and compensation practices align with legal requirements.
Additionally, working with a staffing firm is a great option for companies that are less comfortable disclosing their salaries, as it offers an added level of anonymity. Although salary ranges are still mandated by law, staffing firms do not reveal client names, allowing your organization to remain compliant without disclosing your company’s identity.
Lastly, a reputable staffing firm can help attract and retain top talent by promoting fair and transparent compensation practices. This partnership can help organizations build a positive employer brand and support long-term success in a competitive job market.
Embracing Pay Transparency
Minnesota’s Pay Transparency Law signals a critical shift toward equitable compensation practices, offering both challenges and opportunities for employers. By embracing transparency, businesses can foster trust, attract top talent, and build a reputation as leaders in workplace equity. As the hiring landscape evolves, employers who prioritize compliance and transparency will position themselves for long-term success in an increasingly competitive market.
As a compliant and attorney-led organization, Doherty offers insights and updates about the latest employment law changes. If you’re seeking a compliant partner for customizable workforce solutions, get connected with us today.
