Employer Alert: New NYC Pay Transparency Laws Are (Finally) Coming
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New York City companies with four or more employees will soon be subject to two new and similar pay transparency laws designed to change unfair compensation practices. To be subject to the law, all four workers need not be located in New York City; the law applies if only one position is based in the city.
The city law is set to go into effect November 1, 2022. The state law is expected to be signed by Gov. Hochul soon and would go into effect 270 days after its signing.
In a nutshell
Principally, these laws require the disclosure of compensation information in advertisements for jobs, promotions, or transfers. The definition of “advertisement” in the city law is broad, covering everything from internal and external email blasts to ads on LinkedIn or Indeed, classified ads in print, postings on internal bulletin boards, and flyers handed out at job fairs.
The laws require disclosure of the actual salary, a minimum and maximum starting salary, or hourly wages that the employer believes to be accurate at the time of posting (postings are not required to include overtime, vacation, medical insurance, commissions, tips, bonuses or stock).
Notably, the salary range cannot be open-ended — a posting for a job paying “$15 per hour and up” or “maximum $50,000 per year” would run afoul of the laws. And under the state law, employers will be required to keep records, which may include a history of compensation ranges in the company and any job description for each opportunity.
Employers who violate these rules may be subject to civil penalties and possible damages to aggrieved workers. Under the city law, employers have one chance to correct a job posting error. After that, violations may cost up to $250,000. Under the current version of the state law, civil penalties would start at $1,000 and up to $3,000 for repeat violations.
Getting smart
As these laws go into effect — along with similar laws in other states — local and multi-state employers should review and audit their current pay levels, policies, practices, job descriptions, and postings for new hires, transfers, and promotions. Any personnel involved in hiring, transferring, or promoting employees, or in drafting and posting advertisements, must be familiar with these new requirements.
The new laws come on the heels of New York City’s 2017 salary-history legislation that made it illegal for employers or employment agencies to ask applicants about their salary history or rely on applicants’ salary history to determine salary, benefits, or other compensation during the hiring process.
In short, employers keeping pay information close to the vest is a thing of the past; they must now put their cards on the table to help ensure that similarly situated employees engaged in the same or similar work receive comparable pay.
We urge employers to understand the details of these laws, raise questions as needed, and keep their ears to the ground for new pay transparency developments in the days ahead. Inevitably, test cases will be forthcoming. Complaints under the city law will be adjudicated before the New York City Commission on Human Rights and, assuming the state law passes, disputes under it will be heard by the New York State Department of Labor.