House Substitute 2, HB 105

Delaware's Landmark Pay Transparency Law: HOUSE SUBSTITUTE NO. 2 FOR HOUSE BILL NO. 105

Delaware has taken a significant step towards fostering greater pay equity and transparency with the enactment of House Substitute No. 2 for House Bill No. 105 (HS 2 for HB 105). This landmark legislation, signed into law in 2025, is poised to reshape hiring practices and empower job seekers and employees across the state by mandating the disclosure of compensation information in job postings. While the bill was signed in 2025, its provisions will become effective in September 2027, giving employers a crucial window to prepare for compliance.

The law reflects a growing national trend towards pay transparency, aiming to address persistent wage disparities, particularly those affecting women and people of color. By requiring employers to be upfront about salary ranges and benefits, Delaware seeks to create a more equitable playing field, reduce negotiation gaps, and build trust between employers and their workforce.

Overview

House Substitute No. 2 for House Bill No. 105, often referred to as Delaware's Pay Transparency Law, is designed to promote fairness and reduce wage gaps by requiring employers to disclose compensation information. The primary objective of this legislation is to empower job applicants with essential knowledge, enabling them to make informed career decisions and negotiate salaries from a position of understanding.

Historically, opaque pay practices have contributed to significant wage disparities. In Delaware, for instance, women working full-time, year-round, earn approximately 87 cents for every dollar paid to men, with an annual wage of $54,740 compared to men's $62,740. These disparities are even more pronounced for women of color. The new law directly confronts this issue by mandating transparency, which research has shown to be a simple yet effective tool in closing gender and racial wage gaps.

Beyond benefiting employees, pay transparency also offers advantages for employers. Companies that disclose pay ranges often experience an increase in applicants and a higher quality of candidates. It helps employers attract top talent, reduce turnover, and build greater trust and confidence within their workforce. The law encourages businesses to proactively review their compensation practices, identify and rectify unjustified pay disparities, and strengthen their ability to attract and retain skilled professionals.

The bill was sponsored by Representative Melanie Ross Levin and Senator Laura Sturgeon, who championed its passage through the Delaware General Assembly. Its enactment places Delaware among a growing number of states, including neighboring Maryland and New Jersey, that have adopted similar pay transparency measures.

Key Requirements

The core of Delaware's new pay transparency law lies in its stringent requirements for compensation disclosure. These provisions aim to ensure that applicants and employees have access to clear and comprehensive information about potential earnings and benefits.

• Mandatory Disclosure in Job Postings: Employers are now required to include the hourly or salary compensation range and a general description of the benefits and other compensation in all job postings, whether internal or external. This means that any announcement or advertisement for a job opportunity must explicitly state the expected pay.
• Definition of Compensation Range: The "hourly or salary compensation range" must be established in good faith. This range can be determined by referencing any applicable pay scale, a previously established range for the position, the actual compensation range of individuals currently holding equivalent positions, or the budgeted amount for the role. This flexibility allows employers to use various legitimate methods to determine and disclose a fair and accurate pay range.
• Information for Unposted Opportunities: If a job opportunity is not formally announced or posted (e.g., for certain internal promotions or direct recruitment), the employer must still provide the applicant with the hourly or salary compensation range and a general description of benefits and other compensation. This information must be shared prior to any offer or discussion of compensation and at any time upon the applicant's request. This ensures that even in less formal hiring processes, candidates are still afforded the same transparency.
• Record-Keeping Obligations: To facilitate compliance and enforcement, the law mandates that employers maintain records related to job descriptions and wage rates for their employees. These records must be preserved for at least three years after an employee's separation from employment. This requirement helps ensure accountability and provides a basis for verifying compliance with the pay transparency provisions.

Covered Employers

The scope of Delaware's pay transparency law is clearly defined, specifying which employers and job opportunities fall under its purview. Understanding these distinctions is crucial for businesses operating within the state.

• Employer Size Threshold: The law applies to employers with more than 25 employees. This threshold aims to focus the regulatory burden on larger organizations, while potentially exempting very small businesses from the new requirements. It is important for employers to clarify whether this employee count includes only those physically located in Delaware or all employees nationwide, though the current guidance points to the latter for remote positions.
• Geographic Scope: The pay transparency provisions apply to job opportunities for positions located in Delaware. Additionally, the law covers non-international remote positions offered by an employer based in Delaware. This ensures that the spirit of the law extends to remote work arrangements where the employer's base of operations is within the state, preventing potential loopholes for remote-first companies.

Certain exceptions and limitations are also built into the law:

• Temporary, Interim, or Acting Positions: Job opportunities that are temporary, interim, or acting in nature and necessitate immediate hire are exempt from the requirement to include compensation information in postings. The Delaware Department of Labor (DOL) is authorized to promulgate specific regulations for these types of positions.
• Collective Bargaining Agreements (CBAs): For job opportunities covered by a collective bargaining agreement, the pay transparency provisions do not immediately apply. Instead, they become applicable only when the CBA is amended, modified, or renewed after the effective date of the Act. This allows parties to a CBA the opportunity to consider and incorporate the new disclosure requirements during their negotiation processes.
• Third-Party Postings: Employers are explicitly not held liable for job postings that are digitally replicated and published without their consent. Furthermore, a third party that posts or reposts a job opportunity is not subject to liability under this law. This protects employers from unintended non-compliance due to unauthorized dissemination of their job advertisements.

Employee Rights

Beyond mandating employer disclosures, Delaware's pay transparency law reinforces and expands crucial rights for employees, fostering an environment where open discussion about compensation is protected and encouraged.

• Right to Discuss Wages: Employees are explicitly granted the right to discuss their wages freely with colleagues, supervisors, or any other party. This provision combats wage secrecy policies that have historically hindered employees from understanding potential pay disparities.
• Right to Inquire About Pay: Employees have the right to ask questions about pay and compensation practices without fear of reprisal. This empowers individuals to seek clarity regarding their own compensation and that of their peers, contributing to a more informed workforce.
• Protection Against Retaliation: A cornerstone of the law is the strong protection against retaliation. Employers are prohibited from taking any adverse employment action against an employee for exercising their rights under this law, including discussing wages or inquiring about pay. This ensures that employees can engage in these discussions without jeopardizing their employment.
• Prohibition of Wage Secrecy Agreements: Employers may not require staff to sign non-disclosure agreements or "no-discussion" agreements that would prevent them from talking about their pay. This reinforces the principle of open communication regarding compensation.

These employee rights complement existing state pay equity protections and are vital for creating a workplace culture where transparency is valued and employees feel empowered to advocate for fair compensation.

Penalties

To ensure compliance and deter violations, Delaware's pay transparency law includes a clear framework of penalties for employers who fail to adhere to its requirements. Enforcement is overseen by the Delaware Department of Labor (DOL).

• First Violation: For an employer's initial violation of the pay transparency provisions, the Department of Labor will issue a written warning. This provides an opportunity for employers to correct their practices without immediate financial penalty.
• Second Violation: If an employer commits a second violation, they may face civil penalties of up to $500. This escalating penalty structure aims to encourage prompt compliance after an initial warning.
• Subsequent Violations: For each subsequent violation after the second, employers can be subject to significantly higher fines, up to $10,000 per violation. These substantial penalties underscore the state's commitment to enforcing pay transparency and ensuring equitable employment practices.

The Delaware Department of Labor is authorized to bring administrative actions to enforce these provisions, providing a clear mechanism for addressing non-compliance. The escalating nature of the penalties serves as a strong incentive for employers to proactively review and adjust their hiring and compensation practices to align with the new legal requirements.

Timeline

The journey of House Substitute No. 2 for House Bill No. 105 through the Delaware legislative process culminated in its enactment in 2025, with a deferred effective date to allow for employer preparation.

• Legislative Introduction: The original House Bill 105 was introduced to the Delaware General Assembly.
• House Passage: The House of Representatives passed the legislation, specifically House Substitute 2 for House Bill 105, on June 10, 2025.
• General Assembly Passage: The Delaware General Assembly officially passed House Bill 105 on June 30, 2025.
• Gubernatorial Signature: Governor Matt Meyer signed House Substitute No. 2 to House Bill 105 into law on September 26, 2025. This act formally established the bill as state law.
• Effective Date: The law specifies that it will take effect two years after its enactment. Therefore, the provisions of HS 2 for HB 105 will become enforceable starting September 26, 2027. This two-year lead time is intended to provide employers with ample opportunity to understand the new requirements, conduct necessary audits, and implement compliant practices.

This timeline highlights the legislative process and the deliberate decision to provide a grace period before the law's full implementation, acknowledging the adjustments businesses will need to make.

Compliance Steps

For employers operating in Delaware, proactive and thorough compliance with House Substitute No. 2 for House Bill No. 105 is essential to avoid penalties and foster a positive workplace culture. Given the September 2027 effective date, businesses have a critical window to prepare.

• Conduct a Comprehensive Pay Audit: Employers should begin by conducting an internal audit of their current compensation structures. This involves reviewing existing job descriptions, salary bands, and actual pay rates to identify any potential disparities or inconsistencies. This audit should aim to establish "good faith" pay ranges for all positions, as required by the law.
• Update Job Posting Templates: All job posting templates, for both internal and external advertisements, must be updated to include the required hourly or salary compensation range and a general description of benefits and other compensation. Ensure that the disclosed ranges are accurate and reflect the good-faith determination.
• Develop Procedures for Unposted Opportunities: Establish clear internal procedures for providing compensation and benefits information to applicants for job opportunities that are not formally posted. This information must be given prior to any offer or discussion of compensation and upon an applicant's request.
• Review and Update Record-Keeping Practices: Ensure that systems are in place to maintain records relating to job descriptions and wage rates for all employees for at least three years after their separation. This is crucial for demonstrating compliance if an inquiry or administrative action occurs.
• Train HR and Hiring Managers: Provide comprehensive training to HR personnel, recruiters, and all hiring managers on the new law's requirements. This training should cover how to determine and disclose pay ranges, how to handle applicant inquiries about compensation, and the importance of avoiding retaliation for pay discussions.
• Review Collective Bargaining Agreements: For employers with unionized workforces, review existing collective bargaining agreements. Plan to address pay transparency requirements during the next amendment, modification, or renewal of these agreements, as the law's provisions will apply to CBA-covered positions only after such changes.
• Communicate with Employees: Proactively communicate the new pay transparency policies to current employees. Publish FAQs and conduct informational sessions to ensure managers are trained and ready to discuss pay transparency openly and confidently. Reinforce that employees have the right to discuss wages without fear of retaliation.
• Consult Legal Counsel: Given the complexities of pay equity laws, employers are strongly advised to consult with legal counsel specializing in employment law to ensure full compliance and address any specific organizational challenges.

By taking these proactive steps, Delaware employers can not only ensure adherence to the new law but also enhance their reputation as fair and transparent workplaces, ultimately attracting and retaining top talent.

References

• OutSolve. "What Employers Need to Know About the Delaware Pay Transparency Law." December 29, 2025.
• Delaware House Democrats. "House Passes Ross Levin Bill to Require Pay Transparency in Delaware." June 10, 2025.
• Delaware Department of Human Resources. "Pay Equity 2025." March 25, 2025.
• HR Dive. "Delaware Passes Pay Transparency Law Set to Take Effect in 2027." July 29, 2025.
• Pay Equity Advisor Blog. "Delaware Joins Pay Transparency Wave: New Law Effective 2027." October 06, 2025.
• Delaware General Assembly. "House Substitute 2 for House Bill 105 - Bill Detail." June 05, 2025.
• Ogletree Deakins. "Delaware's New Pay Transparency Requirements to Take Effect in 2027." September 30, 2025.
• LegiScan. "Bill Text: DE HB105 | 2025-2026 | 153rd General Assembly | Draft."
• Delaware General Assembly. "House Bill 105 - Bill Detail."
• Berkshire Associates. "Delaware Pay Transparency Updates Under HB 105." October 21, 2025.