If January’s U.S. jobs report is any indication, 2023 is shaping up to be a good year for employers and employees alike. The labor market has added more jobs than anticipated, unemployment is falling, and inflation is beginning to subside. As the general business climate begins to improve, there will be an increased need for ground transportation services, and for the people involved in providing those services such as reservationists, dispatchers and clerical employees.
Employers located in New York State and New York City with four or more employees who are contemplating adding staff need to be aware of and comply with two similar, though not identical, pay transparency laws that have recently been enacted.
Traditionally, employers have been free to advertise a position without specifying what the job pays, and then discuss compensation at the interview or at the time of hire. This practice has resulted in a statistical wage gap among white men on the one hand, and women and minorities on the other. The latter group are often offered and paid less than their white male counterparts, regardless of their experience and qualifications. Pay transparency laws are designed to address these inequities.
Under the City’s law (which took effect November 1, 2022) and the new State law that goes into effect on September 17, 2023, employers must now specify a compensation range in all advertisements for new positions, and in any notices concerning available transfers and promotions.
“Compensation range” is defined as “the minimum and maximum annual salary or hourly range of compensation… that the employer in good faith believes to be accurate at the time of the posting of an advertisement for such opportunity.” The range cannot be open-ended. For example, “$15 per hour and up” or “maximum $50,000 per year” does not comply with the law. Nor can the range be unreasonable. When the City’s law was first rolled out, Citigroup drew scrutiny for advertising positions ranging from $0 to $2M; a range the banking giant subsequently blamed on a computer glitch.
If unsure of what range to offer, a good rule of thumb is to pick a target wage, and then advertise the position at a compensation range of 20% above and 20% below that target. Additionally, in setting a compensation range it is important to note that the salary that must be disclosed is only the base wage. For purposes of these laws, “salary” does not include overtime, paid time off, health insurance, bonuses, etc.
Where a position is paid solely on commission, the State’s law requires that the advertisement state that it is a commission-based position (there is no such requirement under the City law). The State law also requires that if a job description for the position exists, it must be included in the advertisement, however there is no requirement that a job description be created if it does not already exist.
Employers are required to maintain records showing the salary ranges offered for each position, the compensation ultimately paid, and the job description if one exists. The laws also include anti-retaliation provisions that prohibit employers from refusing to interview or hire a prospective employee or refusing to promote a current employee in response to the individual having exercised rights protected by law. Unlike the State law, the City law gives employees a private right of action to address violations of the law. Both statutes also provide for enforcement by either the NYS Department of Labor or the NYC Commission on Human Rights, both of which are empowered to impose civil penalties.
As noted above, while the State’s law does not take effect until the fall, 2023 is shaping up to be a busy year for new hires. Accordingly, as a practical matter, employers should take steps now to ensure their hiring and record-keeping practices are compliant with these new pay transparency laws.
