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Guidance on New York City’s new salary transparency law

United States
27.04.22
5
Written by
FordHarrison LLP, nationwide U.S. law firm with a singular focus on HR law.
The New York City Commission on Human Rights recently issued guidance regarding the new salary transparency law scheduled to take effect on 15 May 2022.

 

As we previously reported, when it takes effect, the salary transparency law will require New York City employers to include the minimum and maximum salary in advertisements for both internal and external jobs, promotions, and transfer opportunities. Unfortunately, the text of the law left many questions unanswered. The guidance, issued in the form of a fact sheet, answers some of the questions surrounding the law’s requirements and scope.

Which employers are covered?

The New York City Human Rights Law (NYCHRL), including the salary transparency requirements, applies to all New York City employers (and employment agencies) with at least four employees. The guidance clarifies that the new law applies to employers with at least four employees total, so long as one of the employees works in New York City. Temporary help firms are exempted from the law, but employers who work with such firms are not.

Which positions are covered?

The law’s requirements apply to a range of workers, including full- and part-time employees, interns, domestic workers, and independent contractors. The guidance confirms that the law applies to positions paid on both an hourly and salaried basis. The Commission further states that the law will apply to remote work, as it directs employers to follow the law when advertising for a position that ‘can or will be performed in whole or in part, in New York City, whether from an office, in the field, or remotely from the employee’s home.’ Accordingly, a covered employer’s advertisements for fully remote positions appear to be subject to the law’s requirements. Though unclear, the requirements may also potentially apply to hybrid work environments where the remote portion of the work could theoretically be performed in New York City.

Which job advertisements are covered?

The guidance defines ‘advertisement’ as a ‘written description of an available job, promotion, or transfer opportunity that is publicised to a pool of potential applicants,’ regardless of form. The Commission also identifies several examples of covered job listings, including ‘postings on internal bulletin boards, internet advertisements, printed flyers distributed at job fairs, and newspaper advertisements.’ Importantly, the law does not prohibit employers from hiring, transferring, or promoting workers without an advertisement, nor does it require employers to create an advertisement in order to fill a particular position.

What information must be included?

Covered job postings must include the minimum and maximum salary the employer in good faith believes it is willing to pay for the job. The guidance defines ‘good faith’ as the salary range the employer ‘honestly believes at the time they are listing the job advertisement that they are willing to pay the successful applicant(s).’ The job advertisement must include both the minimum and maximum salary as the law prohibits open-ended salary ranges (e.g., ‘USD 15 per hour and up’ or ‘maximum of USD 50,000 per year’). The guidance specifies that where there is no flexibility in the rate of pay, the disclosed range may be a simple statement of pay offered rather than a range (e.g., ‘USD 20 per hour’ or ‘USD 75,000 per year’).

The guidance confirms that salary includes only the base wage or rate of pay (i.e., ‘USD 20 per hour’ or ‘USD 50,000 per year’). As a result, other forms of compensation or benefits, such as health insurance, PTO or vacation time, contributions towards retirement or savings funds (i.e., 401(k)), or bonuses, need not be included in the disclosure.

While not referenced in the guidance, the Commission’s testimony from when the law was originally being debated by the New York City Council’s Committee on Civil and Human Rights clarified that the law does not prohibit employers from offering more than the stated range for better-qualified candidates, or less if financial circumstances change for the company.

How will the law be enforced?

The Commission will accept and investigate complaints of workers subjected to a violation of the law. Its Law Enforcement Bureau may also initiate its own investigations based on tips or testing. The guidance declares that the Commission may impose civil penalties up to USD 250,000 for wilful violations. It may also require employers to amend job advertisements, create policies, conduct training, and provide notices of rights to employees or applicants. Individuals may also sue in court to recover compensatory and punitive damages, legal fees, and costs for violations.

New York City Council’s proposed amendments

While the law is scheduled to take effect on 15 May 2022, a bill seeking to amend the law was recently introduced by members of the New York City Council. The bill proposed three key amendments. First, it sought to delay the effective date to 1 November 2022. Second, it proposed that the law will apply only to employers with 15 or more employees instead of those with four or more. Third, the bill sought to exempt advertisements for positions that are not required to be performed in New York City, which would exempt fully remote positions. The bill proceeded to a hearing on 5 April 2022.

On 14 April 2022, members of the City Council proposed an updated version of the bill with several key changes to the proposal based on the hearing. The updated bill no longer seeks to exempt advertisements for positions ‘not required’ to be performed in New York City, which means remote positions would still be covered by the law.  It also no longer proposes to limit the law to employers with 15 or more employees, relying instead on the four-employee threshold found in the original law.

The updated bill does, however, include several proposals favourable to employers.  First, the proposed amendment would still delay the effective date to 1 November 2022.  Second, it would clarify that the penalty for first violations would be USD 0.  Third, it would provide employers with a 30-day period in which they could cure any violations by, for example, updated and re-publishing job advertisements.  Finally, it would limit the class of individuals who could sue in court to employees suing their employers.  In other words, prospective employees and job applicants would not have a private right of action. The bill has yet to pass.

Next steps for covered employers

While the implementation date may be delayed if the proposed amendments are passed, employers should begin taking steps now to ensure compliance. Among other steps, employers should:

  • Identify whether the employer advertises positions that can or will be performed in New York City.
  • Notify and train employees and recruiters responsible for posting job advertisements on the law’s requirements.
  • Identify salary ranges for job titles using existing rates of pay or projecting them in good faith.
  • Revising any template job advertisements to include the required salary range disclosure.
  • Create a plan for responding to requests for raises and employee discontent that may result from public salary disclosures moving forward.
  • Perform an internal audit of current employee rates of pay to ensure there are no discrepancies between current rates of pay and those published for new positions. If discrepancies exist, they could give rise to an equal pay lawsuit if based on protected characteristics such as race or gender.

For more information about compensation and benefits

Authors
Andrew Williamson
Senior Associate - United States
FordHarrison LLP