New York City's Salary Transparency Law
Beginning November 1, 2022, a recent amendment—often referred to as the “Salary Transparency Law”—to the New York City Human Rights Law (NYCHRL) is set to go into effect. The Salary Transparency Law requires certain employers advertising jobs, promotions and transfer opportunities that can, or will, be conducted in New York City to include good-faith annual salary ranges in any written advertisements for the respective positions. This new law is part of a national trend toward salary transparency, and once effective, classifies an employer’s failure to disclose salary ranges in job advertisements as an unlawful discriminatory practice under the NYCHRL.
Which “Employers” are Subject to Mandatory Salary Range Disclosure?
Employers with four or more employees or one or more domestic workers are covered under the Salary Transparency Law, so long as at least one of those employees works in New York City. Individual employers and owners count towards the four-employee threshold, as well as independent contractors, part-time employees, paid interns, domestic workers and the employer’s family members if working for the employer.
While employment agencies—i.e., any person or firm “undertaking to procure employees or opportunities to work”—regardless of their size are considered “employers” under the Salary Transparency Law, temporary help firms are excluded and may recruit applicants without a published salary range. However, a covered employer working with a temporary help firm to fill open positions is still subject to the Salary Transparency Law.Salary Range Requirements for Written Advertisements after November 1, 2022
Under the Salary Transparency Law, “salary” includes the base annual or hourly wage or rate of pay, but does not include other forms of compensation. In other words, regardless of whether the written advertisement is for an annual salary or an hourly position, covered employers must provide the range—i.e., a minimum and maximum—in any internally or externally advertised job, promotion or transfer opportunity. Importantly, the salary range may not be open-ended (i.e., “$20 per hour and up” or “maximum of $75,000 per year”), but may be fixed if there is no flexibility in the annual salary being offered (i.e., “$15 per hour” or “$75,000 annually”).
The advertised range—whether for salary or hourly wages—must represent what the employer believed, in good faith at the time of publishing, it would pay for the respective job, promotion or transfer opportunity.
Impact on Advertisements for Remote Positions
The Salary Transparency Law does not apply to written advertisements for “[p]ositions that cannot or will not be performed, at least in part, in the city of New York.” While it is unclear whether this necessarily applies to remote workers, the New York City Commission on Human Rights (NYCCHR) advised that “[c]overed employers should follow the [Salary Transparency Law] when advertising for positions 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.”
Whether the Salary Transparency Law would extend to remote workers situated outside of New York City remains an open question, but the NYCCHR guidance, along with comments made during the passage of the law, suggest that employers should provide a salary range in advertisements for remote positions that could be conducted in New York City.
Consequences of Non-Compliance and Potential Liability
The NYCCHR and its Law Enforcement Bureau are tasked with investigating complaints and violations of the Salary Transparency Law. Failure to comply with the salary disclosure requirement could result in a civil penalty of up $125,000, which may be increased up to $250,000 if the NYCCHR or the Law Enforcement Bureau determine the covered employer’s non-compliance was a “willful, wanton or malicious act.” Notably, however, for first-time violations, employers can avoid civil penalty by curing the defective advertisement within 30 days. But failure to cure or additional violations will result in civil penalty.
Additionally, the law provides a private cause of action for current employees against their employers for violation of the salary transparency requirement. This limitation decreases employer exposure against former and prospective employees and sharply limits employer liability.
Recommendations for Compliance
Covered employers offering positions in New York City should ensure their job postings comply with the Salary Transparency Law by taking the following steps:
- Review the NYCHRL, the Salary Transparency Law, and the NYCCHR guidance with key personnel to establish compliance policies, employee trainings, etc.
- Update current internal and external job postings to ensure compliance with Salary Transparency Law.
- Analyze internal employee compensation data to (1) create good-faith salary ranges for advertised positions, and (2) assess potential liability for pay discrimination and other NYCHRL violations, such as pay discrepancies between genders or employees in similar positions.
- Consider creating policies or internal plans with relevant personnel to handle potential employee tension and/or disputes regarding pay discrepancies, if they exist, that may become apparent from the compliant job advertisements.
- If remote positions are an important part of the company’s future, consult legal counsel to ensure all job postings for remote positions which could be conducted in New York City are compliant with the Salary Transparency Law.
- Review any further guidance provided by the NYCCHR and consult legal counsel regarding specific questions as to continued compliance.
Moving forward, employers with a state-wide presence and national employers should prepare for widespread salary transparency requirements in localities across New York and in a growing number of states nationwide. Along with states like Colorado and Washington, the State of New York recently passed legislation (pending Governor Hochul’s approval) requiring salary transparency requirements very similar to New York City’s Salary Transparency Law. As the salary transparency trend continues around the country, employers should take active steps toward compliance and contact legal counsel with any questions.