United States: New York City Salary Disclosure Law Takes Effect November 1st

New York City's pay transparency law is due to take effect on November 1st, 2022 (see our earlier Schnader Client Alert). The new law amends New York City's Human Rights Law to require employers with four or more employees and employment agencies (regardless of size) advertising a job to post a minimum and maximum annual salary range or hourly wage for every job, promotion, and transfer opportunity that an employer, in good faith, believes it will pay. The law was originally slated to take effect on May 15, 2022, but was amended to include a later effective date of November 1st. Notably, with this amendment, only employees have a private right of action under the law against their current employer regarding an advertisement for a job, promotion, or transfer opportunity. However, employers, employment agencies, and employees or their agents can still face civil penalties for non-compliance regardless of whether the aggrieved person is a job applicant or a current employee. Those who violate the law will have a 30-day period to correct a violation and no monetary penalty for the first violation if they provide proof that they cured the violation within the 30 day period from service of a complaint (though the cure will be deemed an admission of liability). This law applies to positions that can or will be performed in New York City.

The Push for Pay Transparency Continues...at the State Level, Too

Following on the heels of New York City's pay transparency law and similar laws in many other jurisdictions throughout the United States, the New York State Legislature recently passed its own salary transparency bill (S9427A), although as of the date of this article's publication the bill has not yet been presented to the Governor.

The New York State law intends to address "systemic pay inequity and discrimination," through greater compensation transparency by employers. If signed into law, the State bill would amend New York's Labor Law by requiring all employers in New York State with four or more employees to disclose the compensation or a "good faith" minimum and maximum range of compensation when advertising for any job, promotion, or transfer opportunity that can be performed, at least in part, within New York State (NYS). For positions paid solely on commission, the job posting must include a general statement that compensation shall be based on commission. Job postings must also include job descriptions for relevant positions where such descriptions already exist.

Unlike the NYC law, covered employers under the NYS law are required to maintain records showing the history of compensation ranges for each job and the job descriptions for those positions. Like NYC's law, temporary staffing agencies would be exempt from the NYS law's requirements. Finally, although the State bill includes an anti-retaliation provision that protects the interest of applicants and current employees, the NYS law does not expressly create a private right of action. Thus, those claiming to be aggrieved must file a complaint with the Commissioner of Labor. The State law, if enacted, would take effect 270 days after it becomes law.

Penalties for Failure to Comply

Once enacted, the law provides that covered employers who violate the law or implementing regulations will be subject to civil penalties, ranging from $1,000 for the first violation to $3,000 for a third or subsequent violations. The law does not specify what constitutes a violation (i.e., whether the violation is per advertisement or each day or instance that the violation persists). If the law is enacted, employers may need to await regulations for more guidance.

In contrast, under NYC's law, employers, employment agencies, and employees who violate the NYC law have thirty (30) days to correct a violation upon receiving a notice of violation from the New York City Commission on Human Rights. If they cure the violation, there is no monetary penalty. But if uncured, they can face civil penalties of up to $250,000 for the first violation and for any subsequent violations. They also can be sued in court by current employees for violation of the law.

Other Considerations and Key Developments

Multi-state employers should be mindful that pay transparency laws in different jurisdictions may vary. For instance, certain jurisdictions, including Connecticut, Rhode Island, and Maryland, require or will soon require covered employers to disclose salary ranges to applicants during the hiring process, upon request (but not in job postings). Other jurisdictions, like Nevada, require employers to proactively provide salary ranges to applicants once the applicants have interviewed for a particular position. In Washington, starting in January 2023, employers will need to disclose information about both salary and benefits in job postings. Colorado requires employers to list the compensation or the minimum and maximum pay range that they believe, in good faith, they might pay, and a general description of all benefits and other compensation, in all job postings and promotional opportunities. Colorado updated its guidance to clarify that the compensation posting requirements do not apply to jobs performed entirely outside of Colorado or postings outside Colorado.

Recently, California enacted a law that expands existing pay transparency laws and imposes new salary disclosure and reporting requirements on California employers. The law, which takes effect on January 1, 2023, requires employers with 15 or more employees (and recruitment agencies advertising on behalf of employers with 15 or more employees) to include the "pay scale" (e.g., the salary or hourly wage range), in all job postings. The California law also requires all employers, regardless of size, to disclose to an employee, upon request, the pay scale for the position in which such employee is presently employed, and also requires employers to maintain records of all job titles and wage rate history for all employees. Private employers with 100 employees or more, including those employers with 100 or more employees hired through labor contractors, must provide yearly pay reports to the state detailing the median and mean hourly rate for each combination of race, ethnicity, and sex within each job category. A number of states and/or localities, including California and New York, have laws prohibiting employers from inquiring about an applicant's salary history.

Remote Considerations

Employers advertising for jobs that can or will be performed remotely need to be mindful that they may be subject to the laws of states or localities of the remote worker.

What Employers Should Do Now

New York and U.S. employers, more broadly, should remain aware of and prepare for this trend towards greater compensation transparency in the workplace. Here are a few takeaways for employers to help minimize legal risks when posting a job position:

1. Consider whether you are advertising for a remote role that can be performed in New York City; if so, ensure compliance with the salary range posting requirements;
2. Review salary ranges for existing employees to ensure they are competitive with market salary ranges;
3. Update job posting templates to include job descriptions. Ensure that job functions are aligned with salary ranges in a particular market and are aligned internally for roles performing similar functions;
4. Train managers and those advertising for jobs, transfers, or promotions on the law's requirements regarding salary range postings;
5. Develop an internal process for responding to salary disclosure requests made by current employees;
6. Keep abreast of legal developments at the state and local levels and guidance issued by government agencies, paying close attention to any instructions with respect to postings for remote jobs;
7. Be proactive in considering ways in which your organization can be more transparent about its decision-making affecting employee terms and conditions of employment; and
8. Confer with your employment counsel before conducting a pay equity self-audit or making pay adjustments to help minimize the risk of unintended consequences, such as pay discrimination suits, which may arise in response to advertising pay ranges that may be higher than salaries being paid to current employees in the same roles.

As pay transparency laws continue to expand nationwide, it is crucial for employers to stay abreast of legal developments in this area and consult with their legal counsel.