Employers face new challenges in navigating state and local pay equity laws. New York City joins a number of other jurisdictions that now require employers to disclose pay ranges when advertising job postings – including for incumbents as well as new hires. This law is set to take effect on May 15, 2022 (unless delayed by pending legislation discussed below). The New York City Commission on Human Rights (the “NYCCHR”) recently published a fact sheet providing guidance with regard to Local Law 32 of 2022 (the “NYC Law”). The NYC Law requires all covered employers to include a minimum and a maximum salary in any advertisement for a job, promotion, or transfer opportunity.
Which Employers and Workers Are Covered by the NYC Law?
Currently, the NYC Law applies to employers that have four (4) or more employees, regardless of their location, so long as the employer has at least one (1) employee working in New York City. The NYC Law also covers employment agencies irrespective of their size; however, temporary agencies seeking applicants are not covered under the NYC Law as they are already required to disclose salary information after interviews in compliance with the NY State Wage Theft Prevention Act. However, employers who work with temporary staffing agencies must follow the new salary transparency requirements under the NYC Law. Under the NYC Law, covered employees include full-time and part-time employees, interns, domestic workers, and independent contractors.
What Types of Job Listings Are Covered by the NYC Law?
Under the NYC Law, “advertisement” means a written description of an available job, promotion, or transfer opportunity publicized to a pool of potential applicants regardless of what medium or platform is used to advertise the opening. Therefore, it covers internet advertisements, printed flyers at job fairs, postings on internal bulletin boards and newspaper advertisements. However, employers have no obligation to advertise opportunities (including internal opportunities), and salary postings are not required for unadvertised opportunities.
The Fact Sheet specifically addresses the open question of whether the law was intended to cover advertisements for remote work. The NYC Law covers any advertisement for any position that can be performed, in whole or in part, in New York City, including remotely from the employee’s home. With the prevalence of remote and flexible work arrangements as a result of the COVID-19 pandemic, employers will need to comply by posting the minimum and maximum salary offered for any position that can be performed remotely because applicants may include New York City residents.
What Types of Compensation Must Be Disclosed?
Covered employers must disclose the minimum and maximum salary that the employer in “good faith” believes they are willing to pay for the position at the time of posting. “Good faith” is defined as the salary range the employer honestly believes “at the time they are listing the job advertisement that they are willing to pay the successful applicant(s).” This standard is similar to the Colorado standard that requires the employer to provide the range that it genuinely believes it would be willing to pay for the job at the time of the posting.
Under the NYC Law, “salary” only includes the base pay or rate of pay; it does not include other forms of compensation or benefits such as insurance, paid or unpaid leave, retirement plans, overtime, commissions, tips, bonuses, stock, or employer-provided meals or lodging. By way of example, salary would include an hourly wage of $15 per hour or an annual base salary of $50,000 per year. Open-ended salary ranges (“$15 per hour and up” or “up to a maximum of $50,000 per year”) are not permitted. Employers may still want to include information in the advertisement about eligibility for benefits and other forms of compensation such as bonus and commission opportunities to remain competitive. The Fact Sheet does not indicate whether a link to salary information would satisfy the employer’s disclosure obligation.
How Is the NYC Law Different from Other State Pay Transparency Laws?
The NYC Law is similar to Colorado’s pay transparency law to the extent that it requires disclosure when the job is advertised or posted. However, the Colorado law goes further and requires posting of more than just salary ranges. The Colorado law requires employers to also include a description of any bonuses, commissions or other applicable forms of compensation as well as benefits.
Other states also require employers to provide pay scale or salary ranges to potential new hires at various stages of the hiring process, starting after the initial interview up through the offer of employment. Those states include California, Connecticut, Maryland, Nevada, Washington State – and as of 2023 – Rhode Island. Cities such as Toledo and Cincinnati also require salary ranges be provided to new job applicants. In terms of incumbents, in addition to NYC and Colorado, pay scale or ranges must be provided in postings or upon request for promotion or transfer opportunities in Connecticut, Nevada, Washington State and in Rhode Island as of 2023.
How Is the NYC Law Enforced?
The NYCCHR is responsible for investigating complaints of discrimination and enforcement of the NYC Law. Employers and employment agencies that violate the NYC Law may have to pay monetary damages to affected employees and civil penalties of up to $250,000 (the NYCCHR can impose a penalty in that amount when the city finds that the violation is the result of the employer’s “willful, wanton or malicious act”). Employers may also be required to amend advertisements and postings, create or update policies, conduct training, provide notices of rights to employees or applicants, and engage in other forms of affirmative relief.
Potential Amendments Are Being Discussed
A bill recently introduced before the New York City Council, Int 0134-2022, if adopted, would exclude employers with fewer than fifteen (15) employees from coverage and move the effective date of the law back to November 1, 2022. Most notably, the bill would exclude “positions that are not required to be performed, at least in part, in the city of New York.” If the amendment passes, it will significantly limit the scope of the NYC Law to only positions with a required nexus to New York City, as opposed to positions that may be performed remotely from anywhere. The NYC Law may also face legal challenges as well. We will continue to monitor developments regarding the NYC Law.
What Should Employers Do to Prepare for the NYC Law?
Given the focus on pay equity in the workplace, employers are well-served to review salary ranges for each job classification, even if the effective date of the NYC Law is delayed. New York, New Jersey, and virtually all other states have anti-discrimination and/or pay equity laws that protect employees from retaliation for discussing wages or other efforts to obtain equal pay. Therefore, employers can expect that their compensation decisions will come under increasing scrutiny. Privileged pay equity audits are highly recommended as an effective means to insure that similarly situated employees are paid fairly and to establish appropriate salary ranges before advertisements are posted.
Also, it is important to confirm what legitimate factors are driving compensation decisions, as employers should expect questions from existing employees regarding explanations for their pay based on review of advertised salary ranges relevant to their current positions. The audit process can also highlight where additional policy updates are useful given developments in pay equity law. As always, documentation of appropriate and legitimate factors for hiring, promotion, transfer and related compensation decisions is key. Updated training is also important given the fast-paced changes in the law, from bans on consideration of prior salary history in compensation decisions to ever-expanding obligations to publicly disclose salary information.
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