New York City’s Wage Transparency Law goes into effect on November 1, 2022, making it mandatory for employers to share the salary or hourly wage in job postings. Specifically, the law provides that when employers with four or more employees post an advertisement for a job position or promotion, the employer must also list the minimum and maximum salary range the employer would pay for that position.
This law will apply to an employer with four or more employees even if only one employee works in New York City, regardless of where the other three employees are located. Notably, the law does not require disclosing other benefits, including paid time off, employer-provided insurance or overtime pay.
After the law was first passed, the local business community pushed back and secured some concessions. For example, as amended, the law only permits current employees to sue their employer for a violation. Formerly, all applicants were permitted to sue employers that failed to post salary ranges. Still, members of the public, including applicants who see a noncompliant job advertisement, may file a complaint with the NYC Commission on Human Rights. The amended law also provides that employers will not be penalized for their first violation of the new law, if the company can correct its error and provide a position’s salary range within 30 days of receiving a notice of complaint from the NYC Commission on Human Rights.
Employers who violate these new laws can be found guilty of “unlawful discriminatory practices” and may be required to pay a fine, undergo training or pay damages to the employee.
To comply with these new requirements, employers should focus on the required skills and credentials for each role, to properly set a minimum and maximum salary range for all jobs listed after November 1, 2022. Employers should also educate staff members involved in the hiring process to make sure they are aware of the new requirements. Employee handbooks must also be updated to reflect these changes. Employers should save all materials they used to document salary decisions, including how they set the range for a particular role.
NYS WAGE TRANSPARENCY LAW
The New York State legislature has also passed state pay transparency legislation, S. 9427, which is widely expected to be signed into law by Governor Kathy Hochul. Once signed, the law will be effective within 270 days. The state law is similar to the NYC counterpart, but one notable difference is that the NYS law allows applicants to bring a suit against an employer who fails to disclose the salary (as opposed to the NYC law, which only permits current employees to bring an action against an employer). Another key distinction between the two are the penalties on employers: a NYC employer has 30 days to correct before they will be penalized, but a NYS employer does not have this correction window. Instead, under the state law, employers will be liable for civil penalties in an amount up to one thousand dollars for a first violation, two thousand dollars for a second violation and three thousand dollars for a third or subsequent violation. The NYS law is clear that to the extent that the NYC law imposes stricter requirements on employers, the NYC requirements would apply to employers operating within the city.
New York is not the only state with salary laws. At least 20 other states have similar statewide prohibitions. An increasing number of cities and states, including Washington, Maryland, California, Connecticut, Colorado and Rhode Island have enacted or are in the process of enacting pay transparency laws similar to the NYC and NYS laws. So, no matter where you end up in your career, it is important to know the ins and outs of this law so you do not find yourself in a sticky situation later.
ADDITIONAL SALARY REGULATIONS IN NEW YORK
- The NYC Salary History Ban
In October 2017, the NYC Commission on Human Rights enacted the Local Law 67, making it illegal for employers in New York City to ask about an applicant’s salary history. The purpose of this law is simple; to help prevent people who may have been underpaid at their previous jobs from being under-compensated in the future. Now employers will have to rely on a candidate’s experience and qualifications when determining their compensation, not what someone else might have been paying them in the past.
All employers throughout New York City must comply with this new law, including both private and public emlpoyers. The law, effective since October 31, 2017, prevents employers from asking applicants about their salary history at any point during the hiring process, including:
- In the initial job application
- In advertisements, postings or descriptions about the job
- Throughout the entire interview process
The law applies whether the position is full-time, part-time or an internship, and even protects independent contractors.
Still, employers can ask forward-looking questions about your salary expectations for your next job or talk about what the compensation for the open position will be. Be careful with volunteering information! If you provide your salary or benefits history on your own, without any questioning or prompting from the employer, they can use this to consider your new salary. Employers may also inquire about your salary history if there are other local, state or federal laws allowing or requiring them to do so.
- The NYS Salary History Ban
Recognizing that employers asking for an applicant’s salary history can contribute to unfairly lower compensation and gender pay disparities, the State of New York passed a similar ban which went into effect January 6, 2020. Labor Law Section 194-a follows the example of Local Law 67 and prohibits employers or their agents from asking about an applicant’s (or current employee’s) previous salaries (including compensation and benefits) in any capacity. The law also prohibits an employer from relying on salary history in deciding to interview an applicant, make an employment offer or in determining what salary to offer an applicant.
The state law applies broadly to all public and private employers of any size across New York, and protects any applicant not currently employed with that employer, including part-time, seasonal and temporary workers. The state law does not, however, protect independent contractors unless they work through an employment agency. This in contrast to NYC Local Law 67.
However, like NYC Local Law 67, employers can ask about an applicant’s salary history where otherwise allowed or required to do so by local, state or federal law. Employers can also learn an applicants’ salary history if the applicant volunteers that information (e.g., if an employee brings up previous pay rates to request a raise or if the employer already knew that information about an employee).
Instead of directly asking an employee about their salary history, employers are encouraged to ask about an applicant’s salary expectations.
CONCLUSION
As the trends of greater protections for employees continue, many hope that these types of salary disclosure laws will lead to pay equity across demographic categories.
An experienced attorney can offer guidance on how the recent changes impact your business or your options as an employee. Contact a member of our team for next steps.
[This blog post has been updated from a previous version, published February 11, 2022]
