In New York City, a newly enacted pay transparency law requires employers to include a good-faith salary range in job postings.
As it turns out, good faith means different things to different employers.
Consider a recent ad from Citibank that listed a job with a salary range of $0 to $2 million—a spread so broad as to be meaningless. The financial services company has since taken down the ad, blaming it on a "technical issue that is causing some job postings to display a system default salary range."
Other job ads show salary spreads that are not preposterous but may still be too broad to be useful to job seekers.
For example, the New York Post has advertised a job for a tech reporter with a salary range listed from $50,000 to $145,000. Dow Jones posted an ad on Indeed for a software development engineer with a range of $40,000 to $160,000 a year. Some ads still have no range posted.
So, how far can a job listing push the limit before it runs afoul of the law? The New York City Commission on Human Rights is tasked with investigating complaints about employers not following the new regulation. The first infraction will result in a warning to the company, while a second could result in a fine up to $250,000.
"We are advising our clients that good faith means good faith," said Brooke A. Schneider, senior counsel with Greenwald Doherty in New York City. "It doesn't have to be a terribly narrow range, but certainly when you put in $0 to $2 million, or something like that, I think you could get a challenge."
Time to Review Pay Practices
New York City has joined other cities such as Toledo, Ohio, and states such as Colorado and California in passing pay transparency laws. The state legislature in New York has passed a similar law, which is awaiting a signature from the governor. The laws are designed to ensure that salaries for women and minorities, who traditionally have been underpaid, are equal to men's salaries.
A broad salary range in a job posting may be considered to be in good faith. Legitimate reasons may include an applicant's geographic location, experience and qualifications, employment lawyers said.
"If I get a resume from somebody who's just out of school with no experience, I might pay them at the bottom of our pay scale. Whereas, if somebody has been in this business for 20 years and also has qualifications, I'll go to the top of my range," said Peter Shapiro, a partner in the New York City office of Lewis Brisbois. "That's a good-faith basis, as far as I'm concerned. But to propose a range so wide it's fictitious, that is where you might have a problem."
Even a $100,000 range can be problematic if it's not rooted in reality. "You should be looking at the salary range internally," Schneider said. "It's a great opportunity for employers to look at their pay practices and the duties they are requiring of their employees and see how they match up."
Too many companies look at external market data for an average salary for a particular position and then extend the dollar range on each end, said Thanh Nguyen, CEO and co-founder of OpenComp, a compensation software provider. Instead, companies should create an internal compensation strategy and guidelines to use when setting salaries.
Too wide of range can also cause morale problems among your current employees.
"If you've got a range of $40,000 to $500,000, your current employees are going to see that. And if they're on the lower end of that spectrum, they're going to be at HR's door," said Michael Schmidt, labor and employment attorney with Cozen O'Connor.
Four percent of respondents to a ResumeBuilder.com survey said they would quit their jobs if they discover their co-workers in the same role earn more money than them; 63 percent would demand equal pay.
Other findings include:
- 88% of workers will demand to know the salary range for their current position, if permitted by law; 68% will demand the highest end of known salary range
- 85% say they're more likely to apply to job that lists a salary range
- 42% say the salary ranges companies list should be limited
- 63% worry salary transparency will cause problems among co-workers
- 92% of workers support salary transparency laws; 61% say laws will improve wage gap
Know that it is unlawful to punish someone for "asking everybody what they are making or going on social media and complaining about their salary," Schmidt said. The National Labor Relations Board would consider that an adverse action.
Nguyen predicts the NYC commission will give employers some leeway initially but will tighten up as time goes on. "Some of these ranges are so large, they don't really reflect the essence of the law," he said.
Though some employers are pushing back against the new law, employment lawyers said taking a hard look at salary structures and posting realistic salary ranges will be beneficial for both the company and the applicant.
"At the end of the day, this could be a positive because employers won't waste their time interviewing somebody whose salary expectations are clearly out of bounds of what the company is willing to pay," Schneider said. "Employees will apply for jobs in a more meaningful way."
Cristina Rouvalis is a freelance writer based in Pittsburgh.