Pay Transparency in New York City: Its Impact Can Be Far Reaching. Here’s What You Should Know

Written by Allan Rooney and Dan Braverman

On November 1, 2022, New York City enacted a new pay transparency law requiring most employers to include salary ranges in job advertisements (including internal positions). The law, designed to address pay inequalities, was signed into law by Mayor Eric Adams in May 2022.

Below is a quick overview of some areas that may require amendments to a company’s hiring policies and practices.

You Must Disclose a Pay Range

If you have four or more employees, with at least one working in New York City, you must disclose a minimum and maximum salary range in job ads. This includes posts for internal promotions or transfer opportunities. The law applies to jobs that can or will be performed in New York City, whether in an office, in the field, or remotely from the employee’s home.

According to guidance from the NYC Commission on Human Rights (NYCCHR), the law applies to a broad range of workers. These include full and part-time employees, including domestic workers, independent contractors, and paid interns. The disclosure requirements apply to hourly and salaried positions. The law does not apply to temporary help firms seeking applicants to join their pool of available temporary workers. However, employers that work with those firms must follow the disclosure requirements. The law does not offer guidance on how wide or narrow a range must be.

Advertising for Jobs

According to NYCCHR, the New York City law covers job “advertisements,” meaning “a written description for an available job, promotion or transfer opportunity that is publicized to a pool of potential applicants,” regardless of the medium. The law also covers open position postings for internal promotions or transfer opportunities. However, nothing in the law requires employers to create an advertisement for a job, meaning companies could hire for positions without placing a job advertisement.

‘Good Faith Belief’

The law requires the pay range disclosure based on a good faith estimate of what the employer is willing to pay a successful applicant. The law doesn’t mandate that an offer to a candidate must fall within the advertised range. That range simply represents to prospective employees a good faith estimate of what they can expect in salary before counting variable compensation like signing bonuses, annual bonuses, or equity. Employers are not required to include other forms of compensation in the good faith estimate, such as:

  • Insurance benefits
  • Paid time off, including sick leave or vacation leave
  • Retirement benefits
  • Overtime benefits
  • Potential severance pay
  • Other compensation, such as tips, bonuses, and stocks

Impact on Labor Certifications for Foreign National Employees

The new law may add complexity to other areas of HR compliance, such as with immigrant workers. The labor certification process required for most permanent residency sponsorship applications requires employers to test the labor market to determine whether any qualified, willing, and able US worker can fill the job before it is offered to a foreign national on a permanent basis.

Before a labor certification can be filed, the employer must obtain a Prevailing Wage Determination from the Department of Labor, a typically lengthy process. Once issued, it establishes the prevailing wage that must be paid to the foreign national employee for granting permanent residency.

Penalties

The NYCCHR guidance indicates that there may be no financial penalties for a first-time violation if the employer can prove that it has cured the violation within 30 days of the complaint. However, after a first-time offense is received, the NYCCHR is empowered to impose civil penalties of up to $250,000.

POV

The new transparency law can be complex and requires companies to think through the positions they are hiring for and the potential impact an advertised salary range may have on the current workforce. Publishing a salary range may compound the issue of pay compression as employers feel compelled to offer higher starting salaries to attract strong talent while keeping tenured employees’ pay the same to manage increased costs better. This could have a dramatic effect on morale. With that said, we feel that this is a step in the right direction to improving pay inequities.

Companies hiring in NYC are advised to conduct an internal pay audit before or in connection with their publication of salary ranges and ensure their HR professionals are trained on the requirements.   Employers should also conduct a pay equity audit to determine and correct unlawful pay disparities. They should also prepare for an increase in requests for pay increases.

If you need help or have questions, please drop us a line at +1 212 545 8022 or visit our website – www.rooney.law.

 

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