NYC has adopted a pay transparency law requiring employers and hiring agents to include the payband for a position in any listing for a job, promotion, or transfer opportunity.
A new pay transparency law taking effect on May 15, 2022 will require employers to list salary ranges “from the lowest to the highest salary the employer in good faith believes at the time of the posting it would pay for the advertised job, promotion or transfer opportunity.” Currently, New York City employers are allowed to withhold pay information until they provide an offer to a candidate. This change comes by amendment to the New York City Human Rights Law (“NYCHRL”), which makes it an unlawful discriminatory practice for employers to refuse to comply with this new requirement. The NYC pay transparency law covers employers with four or more employees and applies to job postings for full-time, part-time, permanent and temporary employees, interns, and independent contractors. However, the law does not apply to job postings for temporary employment at temporary help firms. Like other violations of the NYCHRL, employer penalties may include compensatory damages, punitive damages, attorneys’ fees, and civil penalties.
This amendment is a welcome development for individuals who find themselves pursuing a time-consuming application and interview process, only to discover that the pay is lower than their expected range. On a deeper level, however, this law was enacted to address pay inequity that still persists among women and people of color. The committee report issued with the bill noted that in New York City, a white woman working full-time earns 84 cents for every dollar a white man earns, while a Hispanic woman working full-time earns 46 cents; an African American woman earns 55 cents; and an Asian woman earns about 63 cents. Instituting pay transparency measures “eliminate the wage gaps that result from sex and race discrimination.” This is because “women often ask for a lower salary when they negotiate than men, regardless of their qualifications or the nature of the role.” This requirement will empower applicants with knowledge that will prevent them from selling themselves short during negotiations.
In addition to helping prospective employees, the law will also benefit current employees who may discover that they are being paid far less than their counterparts who join from outside the company. A study by Forbes revealed that employees who stay at employers for longer periods of time earn less over 50% less than if they were to switch jobs every few years. This is because the incremental annual raise an employee may receive year over year, known as the “loyalty discount,” is far less than an individual might earn by receiving a market bump every time they switch jobs. One beneficial consequence of this law is that job postings will now alert employees to how their employers value their role. New York’s Equal Pay Law prohibits employers from paying employees unequally on the basis of a protected class, including gender, race, age, national origin, sexual orientation, military status, disability. As a result of the salary transparency law, long term employees will have information to identify when they are being paid less than their newly hired counterparts.
Another consequence of this new law is that it will help address promotion inequity. While companies may appear to make strong diversity efforts in hiring, a closer look usually reveals that women and people of color are less represented at the higher levels. A McKinsey study noted that for every 100 men promoted to a manager role, only 86 women are promoted. Further, Black employees make up 12% of the private sector workforce but only make up 5% at the manager and VP level. Many factors are to blame for this issue, including unconscious bias toward women and people of color in leadership roles and promotions given via a “tap on the shoulder” to those in the good ole boys networks. However, imposing a requirement on employers to post salary information for promotions will equalize the playing field and allow women and people of color more opportunities.
This law is the latest development in an effort by New York City to close the pay gap. In 2017, the city made it illegal for public and private employers to ask about an applicant’s salary history during the hiring process. By amendment in 2015, New York’s Labor Law made it illegal for employers to enact confidentially policies that prohibit employees from discussing their pay. In recent years, New York has also added additional amendments to its equal pay law. These laws, working together, aim to pinpoint many of the factors that perpetuate the wage gap.
New York City joins various other states and localities who have enacted pay transparency laws; Colorado was the leader in requiring salary ranges in job postings. In Nevada, employers must disclose the salary range after an applicant has completed an interview. Various other states, like California, Connecticut, Maryland, Rhode Island and Washington, require employers to provide this information “upon request.”
Many questions around the application of the new law remain and the New York City Commission on Human Rights will be providing additional guidance in the coming months.