In the wake of the #MeToo movement, pay transparency laws began to crop up around the country. These laws often require companies to post or disclose pay ranges for available jobs and are aimed at closing pay gaps and ensuring pay equity.
The COVID-19 pandemic and the “great resignation” appear to have further energized the transparency trend as more women left the workforce during the pandemic and employers found themselves vying for talent in a hot job market.
In December 2021, the New York City Council passed a salary transparency measure requiring employers to disclose pay ranges in job advertisements. The law was supposed to take effect in May 2022, but its implementation was delayed until November 1, 2022. Other areas in New York State, Westchester County and Ithaca, followed New York City’s lead, adopting their own salary transparency laws, and New York State has similar legislation (Senate Bill S9427A) pending.
Pay transparency laws are proliferating in New York and across the country, resulting in a patchwork of laws that can be challenging for employers to navigate.
This article provides an overview of New York’s salary transparency laws and explores cross-jurisdictional compliance. While this article focuses on New York, the strategies discussed herein may be useful in achieving multistate compliance and dealing with the employee relations issues that may arise when salaries are disclosed.
New York State of Play
Let’s start with a brief overview of salary transparency laws in New York.
New York City
New York City’s salary transparency law, an amendment to the New York City Human Rights Law, took effect on November 1, 2022. The city’s law has caused some companies consternation, given that many employers pay a premium for talent and pay some of their highest salaries to employees working in the city.
The city’s law is a true salary disclosure law; it requires companies with four or more employees, at least one of whom works in New York City, to post salary ranges in job advertisements. As explained by the New York City Commission on Human Rights (NYCCHR) in guidance issued in March 2022, the law’s reach is broad and it applies to a variety of workers, including independent contractors and interns. The disclosure requirements apply to hourly and salaried positions. The law likely applies to fully remote positions because a position could potentially be filled by someone living in New York City.
The city’s law applies to any written description for an available job, including internal promotions or transfer opportunities, if it is publicized to a pool of potential applicants. It extends to most job advertisements regardless of the posting medium, including postings on the internet or internal bulletin boards, and printed flyers distributed at job fairs. Nothing in the law requires a company to create an advertisement for a job, so a company may hire without using an advertisement.
A company must set the salary range based on a “good faith belie[f]” of what it will pay the successful applicant. The range does not have to reflect or include other forms of compensation, such as bonuses, tips, health benefits, and paid time off.
While the consequences for a first-time violation will not be severe, provided the employer can prove it cured the alleged violation within thirty days, subsequent violations can carry hefty monetary penalties. The NYCCHR can impose penalties of up to $250,000 for subsequent violations. The NYCCHR guidance clarifies that employees can also bring a claim against their current employer for violations.
The Westchester County law (Local Law 2022-119), like the New York City law, requires companies to post the salary range for any job, promotion, or transfer opportunity. It is set to take effect on November 6, 2022.
Employers are required to state the minimum and maximum annual salary for the position based on what the company in “good faith believes” it will pay. The law also requires the salary range to be included in postings for internal promotions or transfers. The law applies to positions that are required to be performed, in whole or in part, in Westchester County, which likely includes remote positions.
The Westchester County law is unique in that it is a countywide law that applies to several cities, towns, and some villages. Thus, the reach of the law is broad and itself spans several municipal jurisdictions.
The City of Ithaca enacted a salary transparency law (Ordinance 2022-03) that went into effect on September 1, 2022. The law makes it an unlawful discriminatory practice for an employer to advertise a job, promotion, or transfer opportunity without stating the minimum and maximum hourly or salary compensation.
The law applies to employers with four or more employees whose “standard work location” is in Ithaca, and it requires job postings to state the lowest to the highest hourly or salary compensation the employer in “good faith believes” it will pay for the posting. The law also applies to postings for an internal promotion or transfer.
New York State’s Pending Legislation
On June 1, 2022, the New York State Legislature passed pay transparency legislation, but it has not yet been sent to Governor Kathy Hochul. Thus, at the state level, there are no current pay transparency laws with which companies must comply.
The New York State bill would require employers with four or more employees to include the compensation or a range of compensation in job advertisements for work that can or will be performed, at least in part, in New York. The bill would define “range of compensation” as “the minimum and maximum annual salary or hourly wage … that the employer in good faith believes” it would pay for the position. As with the other laws, employers would be required to include this range in any advertisements for internal promotions or transfers.
Potential Strategies for Compliance
How should we set the range?
If time and resources allow, employers may want to start the process by conducting an internal pay audit prior to setting the ranges to ensure pay equity and consistency.
Because the aim of these laws is to cure systemic pay discrepancies, taking a hard look at the amounts paid for each position and ensuring there are no issues with respect to pay can go a long way. Indeed, this exercise may also help manage employee relations issues because it will help to ensure that current employees’ salaries are in line with those disclosed in job postings.
In determining a range, companies may want to tie the range to clear metrics or objective factors, such as skill level or years of experience. Objectivity is a guidepost here, because it is possible that, under these new laws, employers could be called upon to defend a range. To that end, companies might want to consider documenting the reasons for setting a range, including the factors considered. Of course, the range might also be affected by market factors, which may provide additional objective reasons to justify a given range.
Can we consider what the candidate was making at his or her prior job?
New York State law prohibits employers from asking for salary history information. However, the Westchester County law permits employers to rely on wage history when the candidate voluntarily offers the information to support a wage that is higher than that being offered by the employer.
Which laws do I need to comply with?
This can be a tricky analysis for companies, given that the different laws have different employee count thresholds. This can also be a hard question to answer with respect to fully remote roles. Because the default position under some of these laws is that if the position can be performed in these jurisdictions—such as by someone living in New York City—the disclosure requirements would likely apply. Thus, companies might want to consider the implications for job postings, particularly where a company does not have a physical presence in New York.
Are any positions excluded?
Generally speaking, the New York laws do not typically apply to postings from temporary agencies seeking to fill an applicant pool. However, the laws still require companies working with such agencies to comply.
I’ve hired someone outside the range, now what?
Objective factors that may justify higher pay than that posted in a job advertisement include a candidate’s experience or level of training. The laws do not prohibit employers from paying more than the posted range, but companies will likely want to be able to defend any salary that exceeds a posted range based on objective factors.
How can I prepare my workforce?
Training is also important. Employers might want to consider ensuring that managers, recruiters, and human resources professionals understand their obligations under the law.
Employers might also want to establish a group of employees to whom requests about salary ranges should be directed. Proper training can help ensure that employee or applicant requests related to salary range information are handled and routed appropriately.
What can companies do to manage employee relations issues?
Posting salary ranges will also provide current employees with insight into what their employer is willing to pay for a position. Thus, conducting a pay analysis prior to posting salaries can be an effective way to stave off employee complaints. In addition, training managers, recruiters, and human resources professionals will often go a long way to ensuring that the company spots any employee relations issues early on and addresses them appropriately.
A version of this article was previously published in Law360.