California and New York City are joining Colorado and Washington state in imposing pay range disclosures in job postings. On November 1, 2022, covered employers will be required to include the salary range in a job posting for any position that can be performed, at least in part, in New York City. On January 1, 2023, covered employers in California will be required to publish the pay scale for the position in all job postings that can be filled by California residents. The new California law also requires employers to make certain additional disclosures upon request and to implement new reporting obligations, as detailed below.
Employers should pay careful attention to these pay transparency laws, especially as they implicate job postings for remote positions that can be filled by residents in these jurisdictions.
New York City Requires Employers to List Pay Range in Job Postings
Beginning November 1, 2022, employers with four or more employees (only one of which needs to work within New York City) must disclose the compensation, or range of compensation, in any advertisement for a job, promotion, or transfer opportunity that can or will be performed, at least in part, in New York City. This means that covered employers must include compensation information when advertising for a remote position that can be filled by a resident of New York City.
As detailed in guidance1 issued by the New York City Commission on Human Rights (NYCCHR), covered job postings must state the minimum and maximum annual salary or hourly rate that the employer in good faith believes to be accurate at the time of the posting. Employers are not required, but may choose, to include information about other forms of compensation, such as bonuses, equity, commissions payments, or other employer-provided benefits.
The NYCCHR will not assess civil penalties for a first violation, provided it is cured within 30 days of receiving notice of the violation. However, violations can result in penalties of up to $250,000 for an uncured violation. The law also provides a private right of action to members of the public.
California Requires Employers to List Pay Range in Job Postings, and Imposes Other Disclosure, Retention, and Reporting Obligations
Beginning January 1, 2023, the amendments to California Labor Code Section 432.3 pursuant to SB 1162 require employers with 15 or more employees2 to provide the pay scale for the position in all job an be filled by a California resident, including internal job postings and postings published by third parties on the employer’s behalf. Similar to New York City’s law, the “pay scale” is the salary or hourly wage range that the employer reasonably expects to pay for the position.
Additionally, upon request, all employers hiring in California (regardless of size) must provide job applicants with the pay scale for the position they are applying for and current California employees with the pay scale for their current position. All employers also must retain each California employee’s job title and wage history for the duration of their employment plus three years.
Employers with 100 or more employees (only one of which needs to be located in California) are required to submit annual pay data reports to the California Civil Rights Division (CRD). This reporting obligation is in addition to the annual EEO-1 report to the Equal Employment Opportunity Commission that employers with over 100 employees are already required to submit. Covered employers will no longer be able to submit an EEO-1 report in lieu of a pay data report. In addition, covered employers will now be required to include the median and mean hourly rate for each combination of race, ethnicity, and sex within specified job categories in pay data reports. In order to prepare an accurate report, an employer must create a “snapshot” that counts all of the individuals during a single pay period of the employer’s choice between October 1 and December 31 of the reporting year. Companies with 100 or more employees who are hired through labor contractors must also submit a separate report to the CRD covering those employees. The first pay data report will be due on May 10, 2023. Reports for following years will be due on the second Wednesday of May.
Employers may be assessed civil penalties of between $100 and $10,000 per violation for failure to disclose salary range information in job postings and upon request. Additionally, the CRD may request a court impose a civil penalty of up to $100 for the first violation, and up to $200 for any subsequent violation for failure to submit the pay data to the CRD.
Breakdown of California Requirements by Employer Size
What Employers Should Do Now
To comply with the new pay transparency requirements, covered employers are well-advised to consider the following actions:
- Be prepared to add the target compensation range to new job listings and any active listings on the company’s website or third-party websites.
- Prepare a pay scale for the position at issue prior to considering applicants for the position or interviewing candidates and ensure that it is readily available to provide to any candidate requesting such information. Document the factors informing the pay scale for a particular role, such as location, job level or classification, and/or nature of responsibilities, and assess whether those employees currently in the role are being paid consistent with that pay scale.
- Make sure that, through training or otherwise, managers, decision makers, and other personnel involved in the hiring process are fully informed of California Labor Code Section 432.3’s requirements.
- Confirm that outside recruiters understand California Labor Code Section 432.3 and New York City’s Pay Transparency Law, and that they will comply with their terms.
- If applicable, begin compiling pay data and contact all labor contractors used to supply employees to get necessary pay data for compliance with the new requirements.
- Consult with legal counsel to better understand the impact of these legal developments on your business and workforce.
[1] https://www1.nyc.gov/assets/cchr/downloads/pdf/publications/Salary-Transparency-Factsheet.pdf.
[2] The statute is silent as to whether all or any of the 15 employees must be in California. Clarity on this issue may be provided in future FAQs.
