New York City’s pay transparency law will take effect on November 1, 2022. The new law amends New York City’s Human Rights Law to require employers with four or more employees and employment agencies (regardless of size) advertising a job to post a minimum and maximum annual salary range or hourly wage for every position, promotion, and transfer opportunity that an employer, in good faith, believes it will pay. The law was initially slated to take effect on May 15, 2022, but was amended to include a later effective date of November 1. Notably, with this amendment, only employees have a private right of action under the law against their current employer regarding an advertisement for a job, promotion, or transfer opportunity. However, employers, employment agencies, employees, or their agents can still face civil penalties for non-compliance, regardless of whether the aggrieved person is a job applicant or a current employee. Those who violate the law will have a 30-day period to correct a violation and no monetary penalty for the first violation if they provide proof that they cured the breach within the 30 days from service of a complaint (though the cure will be deemed an admission of liability). This law applies to positions that can or will be performed in New York City.

The Push for Pay Transparency Continues at the State Level, Too

Following New York City’s pay transparency law and similar laws in many other jurisdictions throughout the United States, the New York State Legislature recently passed its salary transparency bill (S9427A). However, as of this article’s publication date, the bill still needs to be presented to the Governor.

The New York State law intends to address “systemic pay inequity and discrimination” through greater compensation transparency by employers. If signed into law, the State bill would amend New York’s Labor Law by requiring all employers in New York State with four or more employees to disclose the compensation or a “good faith” minimum and maximum range of payment when advertising for any job, promotion, or transfer opportunity that can be performed, at least in part, within New York State (NYS). For positions paid solely on commission, the job posting must include a general statement that compensation shall be based on commission. Job postings must also contain job descriptions for relevant positions where such explanations already exist.

Unlike the NYC law, covered employers under the NYS law must maintain records showing the history of compensation ranges for each job and the job descriptions for those positions. Like NYC’s law, temporary staffing agencies would be exempt from the NYS law’s requirements. Finally, although the State bill includes an anti-retaliation provision that protects the interest of applicants and current employees, the NYS law does not expressly create a private right of action. Thus, those claiming aggrieved must file a complaint with the Commissioner of Labor. The State law, if enacted, would take effect 270 days after it becomes law.

Penalties for Failure to Comply

Once enacted, the law provides that covered employers who violate the law or implement regulations will be subject to civil penalties, ranging from $1,000 for the first violation to $3,000 for third or subsequent violations. The law does not specify what constitutes a violation (i.e., whether the breach is per advertisement, each day, or instance that the violation persists). If the law is enacted, employers may need to await regulations for more guidance.

In contrast, under NYC’s law, employers, employment agencies, and employees who violate the NYC law have thirty (30) days to correct a violation upon receiving a notice of violation from the New York City Commission on Human Rights. If they cure the breach, there is no monetary penalty. But if uncured, they can face civil penalties of up to $250,000 for the first violation and any subsequent violations. They also can be sued in court by current employees for breach of the law.

Other Considerations and Key Developments

Multi-state employers should be mindful that pay transparency laws in different jurisdictions may vary. For instance, certain jurisdictions, including Connecticut, Rhode Island, and Maryland, require or will soon require covered employers to disclose salary ranges to applicants during the hiring process upon request (but not in job postings). Other jurisdictions, like Nevada, require employers to proactively provide salary ranges to applicants once the applicants have interviewed for a particular position. In Washington, starting in January 2023, employers must disclose salary and benefits information in job postings. Colorado requires employers to list the compensation or the minimum and maximum pay range that they believe, in good faith, they might pay and a general description of all benefits and other compensation in all job postings and promotional opportunities. Colorado updated its guidance to clarify that the compensation posting requirements do not apply to jobs performed outside of Colorado or postings outside Colorado.

Recently, California enacted a law that expands existing pay transparency laws and imposes new salary disclosure and reporting requirements on California employers. The law, which takes effect on January 1, 2023, requires employers with 15 or more employees (and recruitment agencies advertising on behalf of employers with 15 or more employees) to include the “pay scale” (e.g.,  the salary or hourly wage range), in all job postings. The California law also requires all employers, regardless of size, to disclose to an employee, upon request, the pay scale for the position in which such employee is presently employed, and also requires employers to maintain records of all job titles and wage rate history for all employees. Private employers with 100 employees or more, including those with 100 or more employees hired through labor contractors, must provide yearly pay reports to the state detailing the median and mean hourly rate for each combination of race, ethnicity, and sex within each job category. Several states and localities, including California and New York, have laws prohibiting employers from inquiring about an applicant’s salary history.

Remote Considerations

Employers advertising for jobs that can or will be performed remotely must be mindful that they may be subject to the laws of states or localities of the remote worker.

What Employers Should Do Now

More broadly, New York and U.S. employers should remain aware of and prepare for this trend toward greater compensation transparency in the workplace. Here are a few takeaways for employers to help minimize legal risks when posting a job position:

1. Consider whether you are advertising for a remote role that can be performed in New York City; if so, ensure compliance with the salary range posting requirements;
2. Review salary ranges for existing employees to ensure they are competitive with market salary ranges;
3. Update job posting templates to include job descriptions. Ensure that job functions are aligned with salary ranges in a particular market and are aligned internally for roles performing similar functions;
4. Train managers and those advertising for jobs, transfers, or promotions on the law’s requirements regarding salary range postings;
5. Develop an internal process for responding to salary disclosure requests made by current employees;
6. Keep abreast of legal developments at the state and local levels and guidance issued by government agencies, paying close attention to any instructions concerning postings for remote jobs;
7. Be proactive in considering ways in which your organization can be more transparent about its decision-making affecting employee terms and conditions of employment and
8. Confer with your employment counsel before conducting a pay equity self-audit or making pay adjustments to help minimize the risk of unintended consequences, such as pay discrimination suits, which may arise in response to advertising pay ranges that may be higher than salaries paid to current employees in the same roles.

As pay transparency laws expand nationwide, employers must stay abreast of legal developments in this area and consult their legal counsel.

This summary of legal issues is published for informational purposes only. It does not dispense legal advice or create an attorney-client relationship with those who read it. Readers should obtain professional legal advice before taking any legal action.