PAY EQUITY AND TRANSPARENCY
PREDICTIONS FOR 2026
2025 PREDICTIONS RECAP
Expect an Avalanche of Pay Equity and Transparency Litigation We anticipate a noticeable uptick in litigation, fueled by well-publicized gender pay settlements and pro- plaintiff decisions in states with robust pay equity statutes. Moreover, now that more than a dozen states have pay transparency laws requiring job postings of pay scales and other requirements, you can expect plaintiffs’ attorneys and state enforcement authorities to keep a sharp eye out for violations – and take businesses to court. A September court decision from Washington, for example, will make it easier for plaintiffs to bring costly lawsuits against employers for violations of the state’s highly technical job posting law, inviting a spike in “serial plaintiffs” who merely apply for jobs in aid of bringing large-scale class action lawsuits. Pay Equity Litigation Will Lead to a Flurry of Audits The rise in multi-million dollar pay equity settlements – six or even seven figures – will lead more companies to go on the defensive. Plaintiffs’ firms are using increasingly sophisticated statistical models to identify vulnerabilities, and class-certification strategies are maturing fast. In response, companies will rush to conduct privileged pay-equity audits to identify gaps, justify pay differentials, and clean up risky practices before litigation lands. We’ll also see more targeted audits focused on bonus distribution, starting-pay consistency, and pay progression. Interested in getting started with your own audit? Completing a needs analysis survey will help you identify the first steps you should take to help you kick off 2026 the right way. Pay Data Reporting Will Only Grow
We expected the new Trump administration to drop federal pay equity initiatives, and we were right. The EEOC didn’t revive Component 2 pay data reporting, and no new federal pay equity mandates surfaced. Instead, the agency limited activity to standard demographic reporting through the EEO-1 Component 1 process. As we forecast, the administration’s deregulatory posture and skepticism toward expanded agency authority effectively froze federal efforts. Any momentum around compensation transparency shifted to the states. Trump Administration Didn’t Pursue Pay Equity Initiatives We correctly predicted that the action would be at the state level. 2025 saw Ohio introduce pay stub transparency, New Jersey usher in a far-reaching pay transparency law, a major expansion of Washington’s law, an expansion of Massachusetts’ law, and some additional clarity for California’s broad law, just to name a few. States Stepped Up Their Game We also expected to see a rise in local jurisdictions passing pay data reporting laws, and we were right. New York City is poised to finalize its pay data reporting bill once the city council overrides the mayor’s veto (expected in December). Columbus and Cleveland were also among the cities that jumped on the train in 2025. Pay Data Reporting Required in More Cities
Even without a federal mandate, employers should expect more state and local pay-data reporting obligations in 2026. Large jurisdictions will expand the scope of their existing reporting frameworks (expect broader categories, intersectional data, and deeper analyses of pay bands). Smaller states and major municipalities will introduce their own reporting rules, often piggybacking on California-style models. Companies operating in multiple states will be forced to centralize data- governance practices and build stronger compensation-analytics capabilities. Pay Equity and Transparency Goes Global As we noted in our International section, pay equity efforts have seen significant momentum in the EU and UK. Notably, EU Member States have until June 2026 to incorporate a directive aiming to close the gender pay gap into national laws. Momentum will spread beyond the EU and UK, with Canada, Australia, and several APAC nations expanding their own transparency or reporting mandates.
Kathleen McLeod Caminiti New Jersey/New York Partner, Co-Chair
OUR PREDICTIONS WERE CORRECT
HOW DID WE DO?
Lonnie D. Giamela Los Angeles/Irvine Partner, Co-Chair
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