Last week, on November 1, 2022, New York City’s pay transparency law became effective. The law amends the New York City Human Rights Law (NYCHRL) to make it unlawful for a New York City employer to advertise a job, promotion, or transfer without including the minimum and maximum salary for the position.
We have previously reported on this law here and here, as well as similar laws in other jurisdictions, including the still-pending New York State pay transparency law.
With the new law in already effect, some New York City employers have begun to publish salary/wage ranges in their open job postings. Others have not.
Here are key highlights for employers (including those that may think they are not New York City employers) to consider concerning the new law:
- Covered employers includes those with at least four employees or independent contractors, if at least one works in New York City.
- It applies to both external and internal job postings, including opportunities for promotion or transfer.
- It applies to positions that can or will be performed, in whole or in part, in New York City (i.e., if it is a job that could be filled by a remote worker in New York City, then the posting requirements apply even if employer is not NYC-based but is otherwise a “covered” employer under above terms).
- For the posted job, the employer must disclose the base annual or hourly wage rate of pay, and does not need to include other forms of compensation or benefits, such as health insurance, severance, pay, commissions, overtime pay, bonuses, tips, or equity.
- A posting must disclose a minimum and maximum salary/wage rate, which can be an exact amount, i.e., no range if the minimum and maximum are the same amount (e.g., $50,000 per year), but cannot be open-ended (e.g., $20,000 per year or higher).
- The posted range must provide a minimum and maximum salary/wage that the employer in “good faith” believes it will pay for the job, as of the time of the posting.
- It provides a private right of action for current employees.
- Applicants or employees can file a complaint with NYC Commission on Human Rights (CHR) – violators can be liable for monetary damages, as well as civil penalties of up to $250,000.
- The CHR will not issue monetary penalties for first-time violators, provided the employer cures the violation within 30 days.
Additionally, with the new law already in effect, here are some issues we are seeing and are worth noting:
- Some employers may be setting excessively broad salary ranges that do not on their face seem to be in good faith, e.g., annual salary of $0 to $2,000,000 for client service officer position.
The law requires employers to post the “lowest to the highest salary the employer in good faith believes at the time of the posting” for a particular position. CHR guidance states that “good faith” means “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).” Perhaps there is some rational explanation for the above-referenced range, but it should remind employers to be ready to justify “good faith” for any chosen range.
To that end, employers should consider the salary/wages paid for the same or similar positions, and then document the reasons for the selected range. The law does not require the employer to stay inside the range, but again, employers should document the reasons for doing so (with an eye on ensuring the published range was set in good faith).
- Some employers are – perhaps unwisely – choosing not to disclose salary/wage ranges in job postings now, instead opting to wait until the CHR sends a notice of violation and then taking the “free pass” to cure the violation within 30 days.
There are risks to this approach, and the “free pass” may not be so free. While the CHR may not penalize a first violation, that does not preclude current employees from pursuing claims in a private action against the employer. Moreover, the CHR free pass comes with an admission of liability “for all purposes.” It is not clear what that means, but a litigious employee would likely use such a determination to advance any litigation.
- Some employers do not believe this New York City law applies to them because they have no office in New York City.
Employers outside of New York City need to be cognizant of the law’s potential reach, especially with respect to remote jobs that could be filled by persons living (and working from) New York City. Employers that post for such remote jobs and are otherwise covered employers under the law (i.e., have at least one employee or independent contractor in New York City, and at least four employees overall) should consider including compliant salary/wage ranges in postings for those jobs.
Pay transparency laws – including New York City’s law – may set traps for unwary employers. These laws are an ever-increasing reality across the United States, and could have an impact on multi-jurisdictional employers who are not based in a state or locality that has such a law. It is not too late to be prepared and undertake best practices, even in relation to New York City, where the law is already in force.
