New York City Law to Mandate Salary Transparency
Quick Look: New York City has passed a bill requiring most employers to publish salary ranges in both internal and external job advertisements and postings. This is the latest move to encourage salary transparency and address systemic pay discriminations. The law has taken effect as of November 1, 2022 and employers should carefully review the requirements and begin preparing for compliance.
The New York City (NYC) Council has approved a bill that would require NYC employers with four or more employees to include salary ranges in job postings and advertisements. The bill has now taken effect as of November 1, 2022 and applies to job postings and advertisements, as well as promotions or employee transfer opportunities.
This law may have a significant impact on many NYC employers. Understanding the new law and what it does and does not cover is extremely important for HR compliance purposes. Failing to comply could result in penalties and fines, so it’s critical for business leaders to know what is required of them.
Who and what does the law cover?
Any employer with more than four employees (including independent contractors and owners), or one or more domestic workers, if at least one of the employees works in New York City, must follow the guidelines of the New York City Human Rights Commission.
All employment agencies, regardless of their size, must include salaries in their postings. Temporary staffing firms are exempt from this legislation, as they already provide this information after interviews in compliance with the NY State Wage Theft Prevention Act. However, the companies they match potential employees with must follow the law if they have more than four employees.
The rule dictates: Employers must state the minimum and maximum salary they in good faith believe at the time of the posting they are willing to pay for the advertised job, promotion, or transfer opportunity. “Good faith” means the salary range the employer honestly believes at the time they are listing the job advertisement that they are willing to pay the successful applicant(s). Employers cannot, however, leave the salary range open-ended, such as by stating “$15 per hour and up.”
What happens if an employer violates the law?
Job postings without salary ranges can be reported to the city’s Commission on Human Rights. Employers who violate the requirements will have 30 days to correct their actions, through paying damages to affected employees, conducting trainings, and updating the listings. Not posting the minimum and maximum salaries will be considered an “unlawful discriminatory practice” under the city’s human rights law and may result in a fine of up to $250,000. Penalties may also include compensatory damages, punitive damages, attorneys’ fees, and civil fines.
History of pay transparency laws
This follows the NYC salary history inquiry ban, signed into law by former Mayor Bill de Blasio on May 4, 2017, which prohibits employers from inquiring about or relying on a prospective employee’s salary history. The law further emphasizes that when employers rely on salary histories to determine compensation, they perpetuate the gender wage gap.
It’s worth noting that the federal Equal Pay Act, which bans sex-based pay discrimination, has been in effect since 1963. Yet nearly six decades later, pay inequities continue. While the gender pay gap shrank slightly in 2020, the racial pay gap is wider still. Last year, Black men earned about 75% of what white men did, and Black women earned less than 64%.
Adopting measures like this bill can reduce the likelihood that women or minorities will be prejudiced by prior salary levels and help break the cycle of pay inequity.
Fortunately, similar wage transparency laws already exist in a handful of other states, with a goal of improving equitable pay and other discriminations through transparency:
- Colorado: Requires employers to include compensation in job postings, notify employees of promotional opportunities, and keep job description and wage rate records.
- California: Once the applicant has completed an initial interview with an employer, that employer is required to provide the applicant with the salary or hourly wage ranges for that position upon the applicant’s request.
- Maryland and Washington State: Employers are required to provide applicants with the pay range for a position upon an applicant’s request.
- Nevada: Employers must provide salary range details to any applicant who has been interviewed for a position.
- Connecticut: Wage ranges must be disclosed upon the applicant’s request or when a job offer is made—whichever occurs first.
- And while not effective until January 1, 2023, Rhode Island will soon require employers to provide a wage range for job positions and upon an applicant’s request, also provide the wage range for the open position.
Even if pay transparency laws haven’t been enacted in your state, employers who are candid with applicants about salaries could have an advantage in recruiting and retaining top talent amid the current labor shortage.
How should employers prepare?
New York City employers should prepare for the new wage transparency law by first determining if their company is covered under the law. Then, review the salaries of current positions and determine whether to make any changes to those ranges to attract new talent or retain current employees.
Additionally, employers should work to ensure their pay practices are equitable across all demographic categories, including race and gender.
Next, create a communication plan and notify your employees about what they should expect. Employers should be ready to address any questions or potential hostility that come with pay transparency. For example, disclosing wages could spark jealously among employees, while other workers may not be comfortable with having their salary out in the open.
Transparent communication can help provide certainty during uncertain times. It’s important now more than ever to create a streamlined method of communication with a clear message of balancing transparency and privacy.
Employers and business leaders should also train anyone who is involved in the hiring process so that they fully understand the law. This includes ensuring that those crafting job descriptions clearly state salary ranges and descriptions in a compliant way. Employers should also talk with managers on how to properly handle any requests that come in from employees.
Small- and- medium-sized businesses (SMBs) should consult their legal counsel or the HR experts at their professional employer organization (PEO) if they are unsure of how to prepare for this legislation. The professionals at a PEO can help ensure compliant company policies whether a position is a salaried, exempt, or hourly non-exempt position, and offer guidance for hiring, pay equity, time and labor, and more.
The HR experts at a PEO provide compliance protection and minimize the chances of error and exposure to costly reporting and labor law penalties. Compliance experts at a PEO can also protect your SMB from liability, and help revise company policies, update related employment documentation, assist with questions or concerns, and make recommendations for how to handle issues related to this law.
With recruiting and retention growing more difficult each day, SMBs can also turn to their PEO to help manage talent acquisition and make recruiting more effective.
Recruiting
ExtensisHR offers full-service, flexible HR solutions which provide support and strategies to help companies recruit strong candidates and retain top performers. Working with a leading PEO like ExtensisHR that includes full-cycle recruiting at no added cost gives SMBs access to talent strategies, job description creation, ideal candidate profiles, salary benchmark insight, interview coordination, pre-vetting resumes, DEI initiatives, an integrated applicant tracking system, skills assessments, talent pool assessments, offer letter consultations, and more—all while ensuring a positive candidate experience.
Compliant job descriptions
The importance of well-written, compliant job descriptions in today’s tight labor market cannot be understated. A job description should do more than summarize essential tasks, skills, and responsibilities – it should include clear details about what your company is looking for in your perfect hire. The recruitment professionals at a PEO have the expertise to create job descriptions that are compliant with the new wage transparency law, lead to higher conversation rates, and attract the right applicants.
In addition to crafting compliant job descriptions, your PEO partner will also effectively advertise the open role. While popular job boards like Glassdoor and Indeed have made posting job advertisements easy, it doesn’t mean they are always effective. With hundreds of job sites and thousands of postings every day, it’s hard to stand out from the crowd. A PEO can ensure ads are posted in the right places to attract and hire the right candidate.
Salary benchmarking
Salary benchmarking is a process that matches internal jobs with market pay data or a salary survey to identify the current market pay rate for each position. Compensation professionals at a PEO have access to market intelligence and statistical data to help employers determine salaries, reduce unequal salary disparities, and balance your budget. Accurate salary benchmark data will be key in ensuring a fair and equitable compensation rate is included in job descriptions per the new law.
Of course, structuring compensation is more than just salary, and means including employee benefits, paid time off/vacation policies, growth opportunities, and more – all of which your PEO can assist with.
Diversity, Equity, and Inclusion (DEI)
Employers can also look to the HR experts at their PEO company for their knowledge of anti-discrimination laws and access to workforce management software like ExtensisHR’s DEI Dashboard—which evaluates hires from previous years and compares real-time information regarding pay equity, salary trends across both gender and race demographics, employee turnover, promotions, and more.
Keep current employees happy
With employees weighing their options and being selective, recruiting has become more competitive than ever, and keeping good people is a bigger challenge. Retaining quality talent will require more effort from employers, particularly for SMBs who may not be able to significantly increase compensation.
A PEO can help you get creative in your approach to retaining talent. Offering robust benefit packages, flexible work arrangements, modern employee perks, increasing in-house promotions, and having a strong company culture can go a long way in tackling retention issues.
Compliance is key
In today’s business world, HR is more complex than ever and staying compliant is a must for every organization–regardless of how many changes continue to take place. Be sure to take the necessary time to meet with the experts at your PEO company to review the law, train internal staff, and take all steps to be ready for wage transparency. Doing so will help you stay compliant and avoid any penalties associated with this new law.
Turn to HR experts to ensure your policies are compliant and up to date. We’re here to help.
