[co-author: Julia Canzoneri]*

A new pay disclosure law will go into effect in New York City on May 15, 2022 that requires employers to post salary ranges on advertisements for employment positions. Under current law, employers in New York City are not obligated to provide information on employment salaries until the end of the hiring process. The new law amends Section 8-107 of the New York City Administrative Code to make it an “unlawful discriminatory practice” for employers to advertise a job, promotion, or transfer opportunity without providing the maximum and minimum salaries for the position in the advertisement.

Brief Overview of the New Salary Disclosure Law

The law applies to employers with four or more employees and includes both independent contractors working “in furtherance of an employer’s business enterprise” and parents, spouses, domestic partners, and children of the employer who are employed by the employer as “employees” under the law. The range listed would extend from the lowest salary to the highest salary that the employer “in good faith” believes it would pay for the advertised job, promotion or transfer. However, the law does not apply to advertisements for temporary employees; under the New York State Wage Theft Prevention Act, agencies are already required to provide salary information for temporary employment positions after applicant interviews.

If an employer engages in an unlawfully discriminatory practice in violation of the law, the New York City Commission on Human Rights may impose a civil penalty of up to $125,000 per violation. If the Commission finds that the unlawful discriminatory practice was the result of the employer’s “willful, wanton, or malicious act,” the Commission may impose a penalty of up to $250,000.

Purpose and Potential Effects

The new law has been in the works since 2018 and initially had nine co-sponsors, including its primary sponsor, City Councilmember Helen Rosenthal. According to Councilmember Rosenthal, the law’s disclosure requirements are designed to address “inequity in the local hiring process.” The passage of the bill, which was approved by the New York City Council on December 15, 2021 by a vote of 41 to 7, signals a shift towards greater transparency in the hiring and compensation process. Supporters of the legislation are hopeful that it will combat wage inequity based on gender and race and unfavorable working conditions for employees. Others, however, have warned that the law is ill-fitted to the way in which businesses operate, does not appropriately apply to City jobs that provide performance bonuses and other forms of compensation, and will only serve as an “unnecessary constraint on the hiring process that will help neither employees nor potential employers.”¹

The new law is part of a larger trend of state and local laws requiring greater salary transparency in the hiring process. In 2021, the Equal Pay for Equal Work Act went into effect in Colorado, which similarly requires employers to provide salary ranges in job postings. The Colorado law is even more expansive than the New York City law, as it defines “employers” to include those who employ at least one employee, in comparison to New York’s four-employee threshold. In addition, California, Maryland, Washington, Connecticut, Nevada, and Rhode Island, as well as a number of cities throughout the United States have also enacted laws that aim to promote transparency in salary offerings, although there are variations in how those laws apply.

Practical Information for Employers

Currently, the new pay disclosure law leaves much to be desired in terms of guidance on employer compliance. For example, it is not clear how the “good faith” requirement will apply or whether salary ranges should include discretionary bonus amounts. It is similarly unclear whether the law applies to employers outside of New York City who have employees located in the City and vice versa. This is of particular concern given that the law, which was first introduced prior to the beginning of the COVID-19 pandemic, will likely impact employers with employees working remotely. As of now, employers who are either located in New York City or who have employees located in the City should be prepared to comply with the amendment when it goes into effect, but should also monitor any guidance provided by the New York City Commission on Human Rights over the coming months with respect to planned implementation of the law.

Alicia McCauley, Press Secretary for the New York City Commission on Human Rights, has stated that the Commission will engage in outreach on complying with the law prior to May 15. This outreach will likely begin in April, and will include interpretative guidance with respect to how employers may comply with various aspects of the new law.

In advance of May 15, employers should consider taking proactive measures to minimize the fallout from the new disclosure requirements, including for example, by conducting an internal audit of employee salaries to assess whether there may be any discrepancies in employee salaries that it may be preferable to address prior to the law going into effect, and whether current employee salaries are competitive with salaries for those positions based on market and industry standards. In addition, job postings and related communications with prospective applicants should be reviewed to confirm compliance with the new law.

*Law Clerk

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Footnotes

1) Nick Mordowanec, NYC Job Salary Law Called ‘Transformative’ by Some, ‘Unnecessary’ by Others, Newsweek (Feb. 3, 2022), https://www.newsweek.com/nyc-job-salary-law-called-transformative-some-unnecessary-others-1676020.