Building a Compliant and Competitive Compensation Strategy

Ensuring pay transparency compliance in 2025 isn’t just about checking legal boxes—it’s about building a compensation strategy that aligns with your company’s values, supports talent retention, and stays ahead of evolving state-specific salary transparency laws.

Here are the five essential steps every employer should follow to ensure pay transparency and equity in 2025:

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Step 1: Gather Background Information for Success

Define Your Compensation Strategy

A clear compensation strategy is the foundation for compliant and equitable pay practices. It answers the “why” behind employee pay and provides a consistent framework for decision-making.

A strong compensation philosophy helps you:

• Attract top talent
• Retain key employees
• Motivate performance
• Ensure pay equity
• Align compensation with business goals
• Meet legal compliance requirements

Questions to Consider:

• Who should be involved in building the strategy?
• Does this strategy align with business and HR objectives?
• Are we focused on attracting and retaining the right people?

Gather Internal & External Data:

• Updated job descriptions
• Pros/cons of your current pay structure
• Employee census data (location, job role, demographics, tenure)
• Competitive market data (via salary surveys and benchmarking tools)

Using this data-driven approach ensures your compensation structure supports both compliance and business growth.

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Step 2: Conduct Market Pay Data Analysis

Use Relevant Market Data Scopes:

• Geography: Compensation varies by state and city.
• Industry: Sector norms differ.
• Company Size: Revenue and headcount influence pay.

Benchmark Roles Effectively:

• Match job descriptions (not just titles) by at least 80%.
• Compare your pay structure against credible third-party compensation data.

Evaluate Pay Equity:

• Identify discrepancies by gender, race, ethnicity, tenure, and experience.
• Determine root causes of pay gaps—don’t just patch over symptoms.

Factoring in market trends, inflation, and competitor practices ensures you stay both fair and competitive.

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Step 3: Develop Transparent Pay Structures

Build Pay Ranges:

• Define minimum, midpoint, and maximum salary limits.
• Keep ranges tight—avoid open-ended bands.
• Align ranges with performance and experience expectations.

Address Outliers:

• Red circle rates (above max) and green circle rates (below min) need corrective action.
• Communicate salary adjustments with clarity and purpose.

Ensure Ongoing Pay Equity:

• Use compensation analysis tools to monitor pay equity and prevent legal issues.
• Promote fairness across all demographic groups and job levels.

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Step 4: Implement and Evaluate Your Pay Structure

Roll Out the New Structure:

• Set a go-live date
• Assign internal responsibilities
• Build a transparent communication plan for employees

Communicate why changes are being made, how salary ranges were determined, and how it benefits employees.

Evaluate Annually:

Ask:

• Is this structure equitable, competitive, and fiscally sustainable?
• Can leadership confidently explain the pay framework?
• Is it aligned with our talent acquisition and retention goals?

Use metrics like employee satisfaction, recruitment success, and turnover rates to measure ROI.

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Step 5: Ensure Full Pay Transparency Compliance

Tips to Stay Compliant in 2025:

• Multi-State Employers: Stay updated on each state’s salary disclosure laws.
• Avoid Compliance Evasion: Transparency means more than posting a pay range—it means following the spirit and the letter of the law.
• Focus on High-Visibility Roles: Prioritize job postings in jurisdictions with strict laws.
• Train People Managers: Ensure they’re equipped to handle pay-related questions consistently.
• Maintain Consistency: Apply compensation policies organization-wide.
• Conduct Regular Pay Audits: Catch and fix equity issues before they become legal problems.

Working with MP’s HR experts and leveraging our compensation analysis tools makes this process smoother, smarter, and scalable.

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Conclusion: Invest in Transparency, Drive Long-Term Success

Pay transparency compliance in 2025 is more than a legal obligation—it’s a competitive advantage. When you take a proactive, structured approach to building a transparent compensation strategy, you:

• Stay compliant with state and federal laws
• Foster workplace equity and trust
• Improve employee retention and satisfaction
• Strengthen your employer brand

Partnering with MP gives you the strategic support and technology to build a future-ready compensation plan.

Ready to build a compliant and competitive compensation strategy? Let MP help you navigate pay transparency laws and elevate your workforce.
Talk to an MP HR Expert →

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