What is NYC's pay transparency law? Here's how salary ranges displayed on job listings can affect you
Under the law, employers must publish 'good faith' salary ranges on job ads, promotions, and transfer opportunities including minimum and maximum pay
NEW YORK CITY, NEW YORK: The long-awaited New York's pay transparency law has been finally made effective on November 1, 2022. The judicial law requires New York City employers to disclose salary ranges in job postings across the city. This means candidates could stride towards pay equity leading to a permanent shutdown of gender bias and racial wage gaps.
Under the law, employers must publish “good faith” salary ranges on job ads, promotions, and transfer opportunities including minimum and maximum pay, reported by Business Insider. "Arming the workforce with information is powerful and I think it gives workers a very clear indication of what they can demand. That will give them arguably more power," said Farrell Fritz employment attorney Domenique Camacho Moran. Whilst that provides some clarity to job seekers, it could be a drastic change for enterprises. So here's what employees and employers should expect.
What should employees expect?
Candidates could better position themselves if they are reportedly made aware of the minimum and maximum pay ranges in an enterprise. This move could certainly rule out the criteria of an employer lowballing them and allow fair negotiations because they can push for concrete reasons on why their offer lies at a certain point in the range. Job seekers could also be subjected to fair practices, especially for women and people of color.
"Part of this new law is being able to put people on an equal playing field so they can negotiate their salary from a fair starting point," said Robert Boersma, vice president of operations for North America at Talent.com, according to Business Insider.
What should employers expect?
While the new law allows salary transparency for job seekers, it could have a big effect on current employees. Various enterprises could face being pressured to reportedly offer higher pay only to stay competitive in the commercial talent war. Current employees could view the move as exacerbating pay compression, where the phenomenon in which new hires' pay gains more and more ground on existing staffers' pay. Enterprises could be challenged to adjust their salary bands or risk losing talents, according to the outlet.
"Employers really want to start to think about how to create a salary range that reflects your current workforce," said Domenique Camacho Moran, as per Business Insider. "If you cannot hire talent at that range, you have to think about whether the entire range needs to be bumped for your current employees." Employers also need to be aware that ranges can't be open-ended, such as "$20 per hour or more," but the minimum and maximum can be the same, such as "$20 per hour," if the employer has no flexibility on salary. The law covers base pay, but no other compensation and benefits, reported the source. Reportedly temporary staffing firms are exempted.
To comply with the law, employers should reportedly structure a pay program and consider the factors such as where someone's salary falls in a range. Employers are also encouraged to broach pay conversations around the new law with existing staff, experts say. "Get ahead of it by communicating it to your employees rather than letting them find that information of their own accord," Boersma said. "Make sure there's an outlet for people to have those conversations without building up any sort of resentment." New York City's Commission on Human Rights will investigate complaints alleging violations of the law. According to the source, employers who are found to be non-compliant will get the first warning, without a monetary penalty, and have 30 days to list salary ranges but subsequent violations can cost employers up to $250,000.