New York City Pay Transparency Law Takes Effect Nov. 1

Allen Smith, J.D. By Allen Smith, J.D. October 28, 2022
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​As of Nov. 1, a new era begins for some New York City employers that will now be required to include salary information in advertisements and job postings. It's time for employers with at least four employees to ensure they're in compliance. We've gathered articles on the news from SHRM Online and other outlets.

Compliance Steps

Covered employers should take a range of measures to ensure they're in step with the new law, including the following:

  • Review the salary ranges of current employees to determine an accurate compensation range for all positions before publishing job advertisements.
  • Evaluate salary ranges, with a thorough documentation of the evaluation process, to meet the good-faith requirement of the law to prepare for possible complaints and investigations.
  • Conduct a pay equity audit to find and address any unlawful pay disparities.
  • Confirm that any job-recruitment agencies the employer works with are in compliance with the law. Temporary-help agencies are not covered under the law.

(Constangy Brooks, Smith & Prophete)

Pay Transparency Law May Result in Pay Compression

One of the unintended outcomes of complying with the law may be pay compression. "Pay compression occurs when there is minimal difference in pay between tenured employees and new hires despite differences in their respective knowledge, skills, experience or abilities," said LaKeisha Caton, an attorney with Pryor Cashman in New York City. The publication of salary ranges might exacerbate the problem of pay compression because employers may feel pressured to offer higher starting salaries to attract strong applicants, while the salaries of tenured employees remain stagnant to balance the increased costs, she said.

(SHRM Online)

Pay Transparency Creates Challenges for Employers Sponsoring Foreign Workers

Complying simultaneously with PERM, the process overseen by the U.S. Department of Labor whereby employers sponsor foreign workers for permanent residence, also known as green cards, and state and local pay transparency requirements could be problematic. "Employers that sponsor workers for permanent residency should carefully consider the interaction between their pay transparency compliance and PERM postings and recruitment obligations," said John Medeiros, an attorney with Nilan Johnson Lewis in Minneapolis.

(SHRM Online)

Trend Toward Pay Transparency Continues

Pushed along by new state and local laws, more companies nonetheless are increasing their transparency about pay. Seventeen percent of companies are already disclosing pay range information, even in locations where it's not required by state or local laws, according to a WTW study. At least 62 percent of employers are planning to disclose or considering disclosing pay rate information in the future.

(SHRM Online)

Many Job Seekers Expect Salary Range

One-third of job seekers "would not attend a job interview before knowing the salary the employer is willing to offer," according to a survey from job search engine Adzuna. Twenty-eight percent of respondents said their biggest frustration when looking for a job is job ads that lack salary clarity or that don't include a salary.

In California, effective Jan. 1, 2023, employers with more than 15 employees are required to disclose a pay range in all job postings. Additionally, all employers will be required to provide a pay scale for an employee's current job upon the employee's request.

In Colorado, the Equal Pay for Equal Work Act requires all employers to disclose hourly or salary compensation, or a range of compensation, and a general description of any benefits and other compensation for each job, promotion or transfer opportunity in job postings. The law also applies to any multistate employer that already has at least one employee in Colorado and is posting remote-work roles that might be filled by a Coloradoan. Rather than revealing pay range in job postings, some employers are excluding workers in Colorado from the talent search. About 230 companies have appeared on a site tracking companies that reportedly had job postings excluding candidates from the state. The site currently lists 22 companies.

But pay transparency laws keep taking effect elsewhere, including a law set to take effect in Washington state on Jan. 1, 2023.

(SHRM Online), (SHRM Online) and (Observer)

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