New York City Pay Transparency: What Employers Need to Know
Effective November 1, 2022, covered employers in New York City must comply with new legislation concerning pay transparency. Specifically, the New York City Pay Transparency Law (“Pay Transparency Law” or “Law”) amends the New York City Human Rights Law (NYCHRL) by requiring employers to include minimum and maximum base salaries and wages for a position when advertising or posting a job, promotion, or transfer opportunity. We discuss the new law and guidance issued by the New York City Commission on Human Rights (“Commission”) below. New York City joins a number of other jurisdictions that have passed some form of a pay transparency law, including California, Colorado, Connecticut, Maryland, Nevada, Rhode Island, and Washington.
Who Are “Covered Employers?”
The Pay Transparency Law applies to all New York City employers with at least four employees (which includes owners and individual employers). For counting purposes, all four employees need not work in New York City or in the same location. Instead, a particular workplace is covered so long as one of the employees works in the city.
Employment agencies are also covered by the Law regardless of size, but the Law excepts temporary help firms seeking applicants to join their pool of available workers.
What the Pay Transparency Law Requires
Any advertisement for a job, promotion, or transfer opportunity that is publicized to a pool of potential applicants and would be performed in “whole or in part” in New York City, whether from an office, in the field, or remotely from an employee’s home, must comply with the Law’s requirements. The term advertisement is broadly defined to include, for example, postings on an employer’s internal bulletin boards, ads posted on the internet, printed flyers distributed at job fairs, and newspaper advertisements. Importantly, nothing in the Law or guidance prohibits employers from hiring without the use of advertisements. The Law covers posting for “full- or part-time employees, interns, domestic workers, independent contractors, or any other category of worker protected by the NYCHRL.”
Once the Law becomes effective, an employer must state the minimum and maximum base hourly wage or annual salary that the employer, in “good faith,” believes it would pay for the advertised job, promotion, or transfer opportunity. Further, the stated compensation range cannot be open-ended. As such, an employer could not state in a job listing “salary up to $50,000 per year” or “$15 per hour and higher.” In cases where an employer has no flexibility concerning pay for the position, it can simply state “$20 per hour” to show that the minimum and maximum pay is the same.
Do Employers Have to Include Only Hourly Ranges or Salary in an Advertisement?
Essentially, yes. Under the law, “salary” includes “the base annual or hourly wage or rate of pay.” Employers are not required to include any other types of compensation or benefits offered in connection with an advertised position, promotion, or transfer opportunity, such as employer-provided insurance benefits, paid or unpaid time off, severance, overtime, retirement contributions, or incentive compensation.
The Pay Transparency Law will be enforced through the Commission, which accepts and investigates complaints of discrimination filed by members of the public. The Law Enforcement Bureau also may initiate its own investigation based on its own testing and/or other sources of information it receives. In addition, an individual with a claim against his or her current employer may bring a lawsuit in civil court.
An employer found to have violated the Pay Transparency Law may be required to pay monetary damages to affected employees, amend non-compliant advertisements or postings, create or revise its internal company policies, conduct training, provide certain notices of rights to employees or applicants, and/or engage in other forms of affirmative relief.
The Commission has stated that it will not assess a civil penalty for a first complaint alleging a violation of the Pay Transparency Law, so long as an employer corrects the violation within 30 days of receiving notice from the Commission of a violation. However, an employer who fails to cure the violation within that time may be assessed civil penalties of up to $250,000 for a first violation and for any subsequent violations. There is also a process for employers to submit proof that a violation was remedied and for appealing a civil penalty, which can be found on the Commission’s website.
Covered New York City employers should consider which positions they currently advertise and plan to advertise going forward to ensure compliance with the Law’s requirements. If a position is listed through different channels (e.g., in an external ad and on the company website), employers should confirm that the postings are consistent in all respects including pay range and match any internal documents, such as job descriptions. Further, it is important for employers to give careful thought when setting forth pay ranges and be able to support such ranges if challenged.