New York City is the latest local government to require salary range disclosures in job postings. Here’s what your company can do to get ahead of new legislation.
New York City is poised to become one of the most influential markets to adopt sweeping wage transparency laws this year. Following similar rules and proposals in Colorado, Connecticut, Nevada, Rhode Island and other states, an amendment to the New York City Human Rights Law will take effect November 1, after being delayed from an original date of May 15. It includes a requirement for employers in the city to disclose salary ranges in all advertisements for jobs, promotions and transfer opportunities.
What does the New York pay transparency disclosure require?
- The new law will apply to employers with at least four employees (including independent contractors) or one domestic employee in New York City except for positions listed by temporary employment agencies.
- The disclosure should be based on good faith estimates for the minimum and maximum salary that is anticipated for any position at the time it is posted.
- Companies will receive a warning for first-time infractions, as well as 30 days to correct the problem, before being subject to city penalties.
- Civil penalties for failing to comply with the New York City Human Rights Law — including the new salary requirements — include fines of up to $125,000 for employers engaged in unlawfully discriminatory practices and up to $250,000 if those acts are found to be “willing, wanton or malicious.”
- Aggrieved employees may bring suit against their offending companies through the NYC Commission on Human Rights, which may subject the employer to additional monetary and non-monetary penalties.
- A position is only exempt from the disclosure rules if employees are exclusively located and working from outside New York City — i.e. the position and employer are in New York City but the employee works remotely from a branch in Austin, TX.
How can pay transparency affect my company?
Ultimately, the changes are looking to bring increased transparency to how much a role can potentially pay — something historically considered commercially sensitive by many organizations. Increased transparency both internally and externally could:
- Highlight potential wage disparities and inequities between employees in comparable roles, particularly along gender, race, tenure and geographic lines
- Result in existing employees asking about their own compensation
- Reveal wage practices to both competitors and stakeholders, potentially exposing companies to public scrutiny and greater competition
Five things HR can do right now
In responding tactically to the changes, companies should consider:
- Identifying the positions that may be within scope of the disclosure rules.
- Evaluating job architecture, salary structure, incentive programs and compensation bands to determine proposed compensation bands and whether any adjustments or additional data are needed relative to current market trends or compensation strategy
- Conducting compensation benchmarking (with a particular focus on roles impacted by the disclosure) to assess whether any adjustments are needed based on current market movement and hiring practices
- Conducting a wage equity analysis to assess the prevalence of any potential risk or inequities and considering adjustments to individual wage if needed
- Drafting a template disclosure to include in job postings, and adding supporting narrative or broader employee communications if needed
Following these guidelines can help your company be prepared as other markets shift toward more transparent compensation policies.
(Courtesy PwC)
