As we wrote here and here, the New York City Council passed a salary disclosure law, Int. 134-A, at the beginning of this year in an effort to increase salary transparency and decrease wage disparities based on gender and race. The law was due to take effect this Sunday, May 15.
After the publicity and significant pushback from the business community, the City Council has amended the law to extend the compliance date, clarify some rules, and modify other rules.
Here are the highlights of the changes made by the amendments:
- Compliance deadline extended to November 1. The May 15 compliance deadline has been moved to November 1. Employers will no doubt welcome the additional time to ensure their advertised jobs, promotions, and transfer opportunities in the five boroughs of New York City include the required disclosures.
- Definition of “geographic scope.” The amendment clarifies that the salary disclosure requirement will apply to 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 home. This very broad definition encompasses jobs based in New York City, jobs that are fully remote if the remote location is in New York City, and “hybrid” jobs in which employees commute to New York City for a day or two per week from neighboring states.
- No private right of action for applicants. The original legislation gave both applicants and employees the right to sue their employers for violations of the salary disclosure requirements. With the amendments, applicants no longer have that right, but current employees still do. In addition, the New York City Commission on Human Rights retains authority to investigate violations and issue fines.
- Opportunity to cure first violations. The amendments offer employers some relief in the form of a “notice-and-cure” provision for their first violations. If an employer receives a first complaint from the Commission, the employer will have 30 days from the date of service of the complaint to cure the violation and provide proof of cure (e.g., by submitting a copy of a LinkedIn job posting showing that the salary range has been included). If the proof of cure is accepted by the Commission, there will be no fine. However, for subsequent violations the Commission can issue fines of up to $250,000, and impose injunctive relief, which could include requiring employers to create policies, conduct training, and provide certain Commission-approved notices to applicants and employees.
- Employment agencies and temporary help firms. The amendments clarify that the salary disclosure requirement applies to employment agencies as well as their employees and agents. A temporary help firm, however, is still exempt. A temporary help firm is defined as “a business which recruits and hires its own employees, and assigns those employees to perform work at or services for other organizations, to support or supplement the other organization’s workforce, or to provide assistance in special work situations such as, but not limited to, employee absences, skill shortages, seasonal workloads, or to perform special assignments or projects.”
The following provisions were not changed by the amendments:
- Definition of “salary range.” The amendments retain the same definition of salary range: the minimum and maximum salaries that the employer in good faith believes at the time of the posting it would pay for the advertised job, promotion, or transfer opportunity. The good faith standard gives employers some flexibility in setting the salary range. So too does the rule that the good faith belief be at the time of the posting—presumably allowing employers to offer upon hire a salary that is less than or greater than the posted range. We expect the Commission to issue regulations providing more guidance on this.
- Hourly workers. The amendments do not change the requirement that employers who advertise jobs, promotions, or transfer opportunities for hourly positions must post the salary ranges for those positions. For example, an employer must still advertise that an hourly position will pay $20/hour to $25/hour.
New York City’s salary range law has some similarities with a law enacted in Colorado at the end of 2020. New York City, like Colorado, uses a good faith standard to evaluate salary ranges. But unlike Colorado, New York City does not require the salary disclosure to include benefits information.
Recommendations for employers
In light of the amendments, we recommend that employers covered by the salary range law do the following between now and the new compliance deadline of November 1:
- Determine what the salary ranges will be. Employers will need to figure out salary ranges for hourly and salaried positions, for prospective hires and for current employees including promotions and transfers. There is a threshold requirement of “advertising,” which is defined as “a written description of an available job, promotion, or transfer opportunity that is publicized to a pool of potential applicants.” Employers could consider offering promotion and transfer opportunities on an individual, one-off basis to avoid triggering the salary disclosure law. However, doing so could give rise to discrimination claims based on the employer’s failure to make the positions available to all interested candidates.
- Conduct a pay equity audit. A major concern for employers covered by the law will be the reaction of current employees to the disclosure of salary information. As a result, there is no time like the present for employers to conduct pay equity audits. The audit should be aimed at finding and addressing any pay disparities that might violate the federal Equal Pay Act, Title VII of the Civil Rights Act of 1964, and the New York State Equal Pay Law. The federal EPA applies only to pay discrimination based on sex, but Title VII and the New York State law prohibit pay discrimination based on race, sex, national origin, sexual orientation, and gender identity (among other categories).
- Establish a complaint process. Talent acquisition specialists, Human Resources personnel, and hiring managers should expect some complaints from prospective and current employees about the salary ranges provided. Thus, employers should establish a system that allows to to receive, document, and handle these complaints in a consistent manner. They should also consider adding the following language to any complaint response: “The posted salary range for this position is based on several legitimate, non-discriminatory factors set by the company. The company is committed to ensuring equal pay opportunities for equal work regardless of gender, race, or any other category protected by federal, state, or local pay equity laws.”
- Watch for updated guidance and new regulations. Although the New York City Commission has already posted guidance on the salary disclosure law, be on the lookout for updated guidance from the Commission in light of the amendment. Also be on the lookout for separate regulations from the Commission.
- Train HR. Employers should train their talent acquisition specialists, HR personnel, and hiring managers on the salary disclosure law and pay equity in general. Special focus should be placed on setting salaries in a way that is non-discriminatory and based on quantitative metrics (for example, years of experience) and qualitative ones (for example, job performance). Employers should also include training on other important pay equity laws including the salary history laws of New York State and New York City, which prohibit employers from asking prospective and current employees about their salary histories.