With a growing focus on equal pay and narrowing the racial and gender wage gaps, in recent years, we have seen a nationwide trend of legislation imposing pay transparency requirements on employers. New York City is the latest jurisdiction to jump on the bandwagon with legislation passed by the New York City Council late last year. Here’s what you need to know.
While the new law is clear on what it wants to achieve, there are key questions that remain to be answered. What the law provides is that effective May 15th, New York City employers with four or more employees (including independent contractors) will be required to state the minimum and maximum salary for any job, promotion, or transfer opportunity advertised by the employer. In stating the minimum and maximum salary, employers may disclose a range extending from the lowest to highest salary they in good faith believe at the time of the posting they would pay for the position.
Failure to do so will be considered an unlawful discriminatory practice under New York City’s Human Rights Law (NYCHRL), potentially subjecting employers to a host of remedies traditionally available under the NYCHRL, such as civil penalties and money damages (including attorneys’ fees).
Still, absent further rules or guidance from the New York City Commission of Human Rights (NYCHR), which is anticipated, several issues remain unclear, including among other things:
What it means to “advertise” a job, promotion, or transfer opportunity.
Whether “salary” includes other forms of compensation such as incentive compensation (e.g., commissions, bonuses, etc.).
How to calculate “salary” for positions that are not paid on a salary basis.
The geographic reach (such as if it only applies to positions in New York City).
Notably excluded from the law are job advertisements for temporary employment with temporary staffing firms, as such firms already provide wage range information in accordance with the New York State Wage Theft Prevention Act.
Not a new concept, but it could present new challenges
Several states have enacted similar pay transparency legislation, such as California, Colorado, Connecticut, Maryland, Nevada, Rhode Island, and Washington, or introduced similar legislation, such as Massachusetts and Pennsylvania.
In addition, even prior to New York City’s salary transparency law, New York State and New York City placed limits on employers’ ability to ask or require applicants to disclose salary history information during the hiring process.
These laws evince a clear motivation to close wage gaps and promote pay equity. They also provide further leverage to job seekers on the lookout for their next job opportunity and to current employees seeking to negotiate higher compensation in their existing jobs. Amid a continuing labor shortage in the U.S., employers are generally concerned that such legislation will not only be burdensome and time-consuming to implement, but will further exacerbate their ability to hire and retain employees by, among other things, reducing the pool of candidates and making labor even more competitive.
What employers need to do right away
In advance of the effective date, and while we await further rules or guidance from the NYCHR, here are a few things covered employers may want to consider doing to prepare for compliance:
Identify applicable salary ranges for advertised job, promotion, and transfer opportunities, and review existing job advertisements and create new templates to use after May 15, 2022.
Review and evaluate current compensation practices, including the relevant factors considered for determining compensation, to ensure they are fair and equitable, that any salary representations are consistent with the given salary range for a specific position, and that there are no significant discrepancies or inequities, especially as equal pay claims are on the rise.
Train supervisors, managers, and human resources professionals on the implications of this new salary range transparency law.
Continue to monitor for any subsequent rules or guidance from the NYCHR.
We expect more clarification, more changes and more considerations in this area that will impact employers. This is clearly a space to watch and learn from.
Marisa Sandler is an employment lawyer and litigator at Tannenbaum Helpern Syracuse & Hirschtritt LLP. Maryann Stallone, a partner at the firm, also contributed.