Pay transparency has become one of the top priorities in people management. Both the European Union and the United States are introducing measures aimed at reducing pay disparities, improving equal opportunities, and ensuring that compensation decisions are based on objective criteria.
However, their regulatory approaches differ. While Europe is moving toward a common framework through Directive (EU) 2023/970, the United States maintains a decentralized system, with obligations that vary by state or locality.
For businesses, understanding these changes is essential. Adapting involves more than simply publishing salaries: it requires reviewing job evaluation practices, establishing consistent salary bands, and developing compensation policies that promote pay equity.
What Is Pay Transparency, and Why Does It Matter?
Pay transparency means providing clear information about the criteria used to determine compensation, opportunities for progression, and the salary ranges associated with each role.
Its purpose is to identify potential inequalities and ensure that professionals performing equal work or work of equal value receive equitable compensation.
Its main benefits include reducing unjustified pay gaps, improving employee trust, strengthening employer branding, and increasing an organization’s ability to attract and retain talent.
However, achieving genuine equal pay requires a sound organizational structure in which pay differences can be explained through verifiable factors such as responsibilities, skills, and working conditions.
Pay Transparency in the European Union: Key Obligations
Directive (EU) 2023/970 establishes new measures to strengthen equal pay between women and men.
The transposition deadline was June 7, 2026, although many member states have not yet fully incorporated the Directive into national law.
Its main requirements include:
- Pay information during recruitment: Communicating the starting salary or pay range before the interview.
- A ban on salary history questions: Preventing previous compensation from influencing new offers.
- The right to information: Allowing employees to obtain information about average pay levels, broken down by sex, for equal work or work of equal value.
- Objective criteria: Using gender-neutral systems for job evaluation and career progression.
- Pay gap reporting: Establishing periodic reporting obligations for certain companies.
In addition, a joint pay assessment must be carried out when pay differences of at least 5% are identified within a category of workers and are neither justified nor corrected under the conditions established by the Directive.
The Status of Pay Transparency Implementation in Europe
As of October 2026, implementation of the Directive varies significantly across countries.
| Country | Status and Progress |
|---|---|
| Spain | Transposition pending; draft legislation and pre-existing pay legislation are in place. |
| France | Legislation is being developed; transposition has not been completed. |
| Germany | No draft transposition legislation has been published; pre-existing national obligations remain in place. |
| Italy | Transposition completed through Legislative Decree 96/2026. |
| Greece | Transposition approved; obligations are being phased in. |
| Poland | Partial transposition, with new recruitment rules already in force. |
| Netherlands | Draft legislation published; implementation expected in 2027. |
| Sweden | Draft legislation prepared, with the government requesting a postponement of implementation. |
According to monitoring available in October 2026, five countries—Greece, Italy, Lithuania, Malta, and Slovakia—had completed transposition, while the others remained at different stages of the process.
This situation requires multinational companies to distinguish between EU requirements and the obligations actually applicable in each jurisdiction.
Pay Transparency in Spain: What Must Companies Comply With?
Spain’s pay transparency framework predates the European Directive.
Royal Decree 902/2020 establishes obligations relating to equal pay, including pay registers and, for companies required to have equality plans, pay audits.
The main current requirements include:
- Pay registers for all companies, regardless of size.
- Equality plans and pay audits for companies subject to these requirements, generally those with 50 or more employees.
- Job evaluation systems based on objective criteria and free from gender bias.
As of October 2026, full transposition of the European Directive remained pending. It is therefore important to distinguish between obligations already in force and those requiring additional legislation.
For Spanish organizations, preparing early will help them adapt their compensation policies and reduce the risk of noncompliance.
Pay Transparency in the United States: State-Level Legislation
Unlike Europe, the United States does not have a general federal law requiring all employers to publish salary bands in their job advertisements.
Regulation depends on individual states and, in some cases, cities. Organizations operating across multiple jurisdictions must therefore adapt their recruitment processes accordingly.
| State | In Effect Since | Key Requirements |
|---|---|---|
| Colorado | 2021 | Disclosure of salary ranges and benefits. |
| California | 2023 | Salary ranges in job postings by covered employers with 15 or more employees. |
| New York | 2023 | Pay information in postings for jobs, promotions, and transfers. |
| Washington | 2023 | Salary ranges and a description of benefits. |
| Minnesota | 2025 | Salary ranges and benefits for covered employers. |
| Massachusetts | 2025 | Salary ranges in job postings by employers with 25 or more employees. |
| New Jersey | 2025 | Salary or salary range, benefits, and other compensation. |
| Vermont | 2025 | Pay information in job advertisements. |
| Virginia | July 2026 | Salary ranges in job postings and internal opportunities. |
Specific obligations depend on employer size, job location, and other legal criteria. Some states also impose salary history restrictions and grant employees rights to pay information.
Differences Between European and US Regulations
Although both models aim to improve pay equity, they differ in important ways.
The European Union promotes a broader framework that combines recruitment transparency, information rights, the evaluation of work of equal value, and reporting on pay differences.
In the United States, measures focus primarily on salary range disclosure and transparency during recruitment, although additional obligations apply depending on the jurisdiction.
For multinationals, the challenge is to establish a global compensation policy that meets local requirements without sacrificing internal consistency.
Job Evaluation and Salary Bands: Keys to Adapting
Pay transparency requires more than communicating figures. Companies need to explain how they determine compensation and why pay differences exist between roles.
Job evaluation enables organizations to assess responsibilities, knowledge, skills, effort, and working conditions using objective criteria.
This assessment provides a foundation for consistent salary bands that reflect the value of each role and are benchmarked against market data.
A clearly defined job architecture helps identify inequalities, improves promotion decisions, and supports the development of more competitive compensation policies.
In this context, SPOTLIGHT’s specialized compensation consulting services can help turn new regulatory requirements into opportunities for organizational improvement.
How Can You Prepare Your Business for Pay Transparency?
Preparation should begin before all national obligations take effect.
Recommended steps include assessing your compensation structure, reviewing job classifications, identifying unjustified pay differences, and establishing transparent criteria for determining salaries and promotions.
It is also essential to train HR leaders and update recruitment, internal communications, and performance management processes.
SPOTLIGHT’s Compensation Journey methodology supports this process from initial assessment through the development and implementation of compensation structures aligned with each organization’s needs.
SPOTLIGHT: Compensation Consulting to Address New Challenges
Regulatory developments in Europe and the United States confirm that pay transparency will play an increasingly important role in business strategy.
At SPOTLIGHT, we help organizations optimize their job architecture and compensation structures through specialized consulting solutions.
Our services include compensation program assessments, job architecture design, salary range development, and ongoing compensation advice.
Pay transparency should not be viewed solely as a legal obligation, but also as an opportunity to build fairer, more competitive, and more sustainable organizations.
Is your business ready for the new pay transparency requirements? Discover how SPOTLIGHT can help you develop an objective, consistent compensation strategy that responds to regulatory changes.
