When it comes to pay practices, employers are accustomed to being told by federal, state, and local legislators what to do. DON’T engage in discriminatory pay practices. DO pay overtime when required. DO pay minimum wage. DON’T pay under the table. DO pay employees equally for equal work. DON’T ask applicants or employees their salary history when offering or negotiating pay. DON’T request a potential employee’s criminal history on a job application. The list goes on.
Now, in many states and localities, including New York City, employers are being told they must disclose pay scales in their job posts. The goal of this sweeping pay transparency legislation, which has gained momentum this year and has established a foothold across the United States, is to promote pay equity by requiring employers to be more publicly transparent about their employee pay. At least, in theory, pay transparency should enable women and other under-paid, under-represented workers to gain greater insight into what a position might pay and what to ask for in negotiations, with the hope of narrowing existing pay gaps.
New York City is a recent jurisdiction to mandate pay transparency requirements. At first glance, employers outside the Big Apple might not think anything of it. “What’s the big deal?” they might ask, or “What does it matter to me?” In fact, it could mean a lot. Given: (i) New York City remains the financial epicenter of the world, (ii) the growing wave of remote work, and (iii) many employers post job advertisements on job boards nationally, the recent amendments to New York City’s Human Rights law, which took effect November 1, 2022, might be more relevant, applicable, and far-reaching than most employers think.
The New York City Human Rights Law makes it an unlawful discriminatory practice to not include in job listings the minimum and maximum salary offered for any position located within New York City. Under the law, covered employers must, in good faith, post the minimum and maximum salary or hourly wage for each advertised job, promotion, or transfer opportunity. Some key technical requirements of the law are as follows:
- The wage or salary range may not be open-ended. The minimum and maximum ends of the pay spectrum must be definitively stated;
- Only the base pay (salary or hourly wage) must be included in the job listing – other benefits and employee compensation do not need to be included;
- Employers are not required to post a range of pay where there is no flexibility in the rate of pay (for example, if the wage/salary is set in stone and non-negotiable);
- “Good faith” means the pay range the employer honestly believes it is willing to pay successful applicants; and
- The law’s requirements apply to a range of workers, including full- and part-time employees, interns, and independent contractors.
Obviously, the law applies to employers located in New York City or having employees situated in New York City. The technical requirements listed above, however, do not answer the question of why this new law is relevant to employers located outside New York City. Here’s why:
- The law applies to all employers (located anywhere) that have at least four employees, so long as one of the employees works in New York City – in other words, the four employees do not need to work in the same location or all work in New York City;
- Owners and individual employers count toward the four employees, as do independent contractors, part-time employees, paid interns, and domestic workers.
- While the law exempts from its coverage positions that cannot or will not be performed, at least in part, in New York City, employers posting a position that “can or will be performed in whole or in part, in New York City, whether from an office, in the field, or remotely from the employee’s home,” are covered by the law.
Consequently, under certain circumstances, employers nationwide may be expected to comply with New York City’s new law. It remains to be seen whether employers can exclude applicants situated in New York City to avoid coverage under the law (which is specifically prohibited by other state’s laws, like Colorado’s Equal Pay for Equal Work Act) but, regardless, excluding New York City candidates is far easier said than done. This is because the job advertisements covered by the law include postings on internal bulletin boards, internet advertisements, printed flyers distributed at job fairs, online job boards, and newspaper advertisements. Thus, any employer using Indeed, Monster, Simply Hired, LinkedIn, or the like, which advertises fully remote or hybrid positions nationwide, likely must comply with New York City’s pay transparency law.
Employers, nevertheless, might question why bother adjusting their job posting practices and procedures to ensure compliance with this new law. New York’s pay transparency law has sharp teeth. While an employer will not be assessed a penalty for a first complaint if it cures a violation within 30 days from receipt of notice of same, employers may be fined civil penalties up to $250,000 for willful violations of the law.
There are several steps employers can take to ensure compliance with these new pay transparency laws, which may bolster an employer’s compliance with other statutory, public policy and HR concerns, such as disparate pay practices under the Equal Pay Act of 1963 (and state analogs). Employers should:
- Review their internal recruiting practices, policies, procedures, and templates to ensure all current and future job postings comply with these laws;
- Revisit and update, as needed, all job descriptions for their workforce;
- Conduct a market analysis to ensure their pay ranges are consistent with their competitors and, if necessary, adjust rates of pay for open positions to be competitive;
- Perform a pay equity audit to address existing pay imbalances in their workforce; and
- Provide manager and human resource training to anyone involved in negotiating pay for new hires to ensure equal treatment for each applicant and avoid violating pay transparency and other applicable laws.
This roadmap serves several purposes, from ensuring compliance with the growing wave of pay transparency laws to avoiding the growing wave of equal pay litigation while promoting pay equity and maintaining a competitive edge in the marketplace. Employers wondering whether they are governed by any pay transparency laws, questioning how to comply with them, or needing assistance adjusting their policies, procedures, and pay practices accordingly should consult with their human resource professionals and contact their employment attorneys.