United States: The Upcoming NYC Pay Transparency Law Aims To Reduce The Wage Gap – Employers Should Be Prepared

Key Takeaways:

• Effective November 1, 2022, New York City employers having at least four employees or one domestic worker, will be required to definitively state in good faith, the minimum and maximum pay-rate when advertising open job positions.
• The increase in remote work may subject a wide range of NYC employers to the new pay transparency law, even if their employees work primarily out of state.
• Employers covered by the new law should consult their human resources department, and review their internal recruiting and pay practices to ensure their employees are paid reasonable wages based on current market conditions, given that salary ranges for the same or similar positions will be made public under the new law.

New York's soon-to-be-effective pay transparency law (Int. No. 134-A) will require New York employers, employment agencies, and employees or agents of these entities to disclose the salary ranges for open positions in job advertisements. Employers will need to update their internal pay practices to ensure compliance. The new law becomes effective on November 1, 2022.

Employers covered under the new law will be required to state in good faith, the minimum and maximum annual salary or hourly wage for the advertised job, promotion, or transfer opportunity. The wage or salary range must be definitively stated in the job advertisement -- the range cannot be open-ended. This will be required regardless of whether the job is advertised internally or externally. Employers that exclude this information from a job advertisement may be deemed to have performed an unlawful discriminatory practice. The new law, however, does not prohibit employers from hiring without using an advertisement or require employers to create an advertisement in order to hire.

The law currently only applies to employers that have at least four employees or one domestic worker, and are advertising job positions performed at least in part, in NewYork City."¹ Importantly, the four employees do not need to work in the same location. As long as one of the employees works in New York City, the workplace is covered under the new law. At the same time, the rise in remote work has given numerous New Yorkers the flexibility to work primarily out-of-state, while only traveling to New York to perform specific duties when needed. Remote workers affiliated with a New York City based office are likely to be considered a New York employee for the purposes of this statute, as long as they perform some part of their duties in the city.

With the introduction of the new pay transparency law, New York City aims to continue chipping away at the existing gender and race-based wage-gaps. On average, women in New York State make 86 cents for every dollar earned by a man – one of the smaller gender pay gaps across U.S. states.² On a national scale, women working full-time earn around 83% of what men do.³ Such wage gaps are also prevalent when race is factored in – in 2020, Caucasians were the highest paid race of New York City workers. These workers were paid 1.02 times more than Asian workers, who made the second highest salary of any race/ethnicity in New York City.⁴ By requiring employers to disclose both the minimum and maximum annual salary or hourly wage when advertising open positions, the new law aims to assist workers in receiving competitive wages.

Here are some suggested steps that employers can take to prepare for complying with the new statute:

• Review the market to determine whether it is sensible to update the rate of pay for the open positions at your company. The new transparency law may motivate employers to increase the salaries of their open positions to remain competitive for top talent. An issue associated with the increased transparency is that employers may need to offer new talent more money than that paid to current employees for the same role. In turn, this could contribute to low workforce morale and potential discrimination claims. Employers should take a preemptive look at relevant salary histories within their respective industries to determine appropriate levels of compensation.
• Do not attempt to avoid the new transparency laws by only advertising jobs in jurisdictions that do not require salary information. Instead, embrace transparency and take the opportunity to assist in correcting social inequities. Employers should consult with their human resources and recruiting departments to agree on the pay information that should be included in all job postings.
• Conduct a pay audit under privilege at your company to address any existing salary imbalances. Doing so proactively will allow your company to quickly address any potential conflicts existing among your employees.
• Develop policies for negotiating salaries for new hires; doing so will assist in providing equal consideration to each applicant. However, do not ask applicants or employees about their salary history. New York employers are prohibited from asking job applicants to provide their wage or salary history as a condition of employment. Additionally, current employees do not have to provide their salary history from any outside employers. New York law also prevents businesses from seeking similar information from other sources.⁵ As a preventative measure, employers should ensure that their recruiters do not ask applicants to provide their salary histories.

Employers intending on advertising job positions in New York City should consult their human resources department, and review their internal recruiting and pay practices, to ensure their employees are paid competitive wages.

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