New York City’s Pay Transparency Law Takes Effect November 1, 2022: Are You Ready?

Covered Employers

The New York City Commission on Human Rights has issued Guidance explaining that the employers covered by this law are those with four or more employees (including owners and independent contractors), or one or more domestic workers, so long as at least one employee or worker “works in New York City.” Whether this covers employers with but a single employee who only occasionally work in New York City is, at this point, an open question. Nevertheless, this is obviously a low bar for inclusion in the reach of the law, and even very small employers will have to comply.

Covered Job Listings

As explained by the NYC Commission on Human Rights, covered job listings include any advertisement (i.e., a written description publicized to a pool of potential applicants) for a job, promotion or transfer opportunity that will be, or can be, performed, in whole or in part, in New York City.

Information to Include

Covered employers must now include in covered job listings the minimum and maximum salary they in good faith believe at the time of posting they are willing to pay for the advertised job, promotion or transfer opportunity. Open-ended ranges are not permissible. Under the law, salary includes the base annual salary, hourly wage or rate of pay. Salary does not include other forms of compensation or benefits, such as paid time off, commissions, bonuses or equity.

Enforcement

Applicants are not generally provided with a private cause of action for an alleged violation of this law. Current employees, however, are provided with a private right of action to bring claims in court against their current employer in relation to any non-compliant advertisement for a job, promotion or transfer opportunity with their employer.

In addition, the NYC Commission on Human Rights will accept and investigate complaints under this law. The Commission will not assess a penalty for a first complaint if the employer shows it has corrected the violation within 30 days of receiving notice from the Commission. Thereafter, covered employers may have to pay civil penalties of up to $250,000 for an uncured first violation, as well as any subsequent violations.

Pay Transparency in the Recruiting and Hiring Process Is a Growing National Trend

Employers must be aware that New York City is not alone in enacting such pay transparency legislation impacting the recruiting and hiring process. Similar laws requiring pay transparency in job advertisements are already in effect in Colorado, Ithaca, N.Y. and Jersey City, N.J., and similar laws will soon take effect in Westchester County, N.Y. (effective 11/6/22), California (effective 1/1/23) and Washington (effective 1/1/23). The New York State Legislature also recently passed a similar bill, but it awaits sign off by the governor.

Pillsbury recently published an alert regarding the new California law.

Employers must also ensure compliance with laws requiring employers to provide salary ranges or related information at certain stages during the hiring process or upon an applicant’s request. Such laws are already in effect, or soon will be in effect, in the following jurisdictions: Connecticut, Maryland, Nevada, Rhode Island (effective 1/1/23), Washington, Cincinnati, Ohio and Toledo, Ohio.

Next Steps for Employers

Employers should determine which of these laws apply to them and modify their practices accordingly to ensure compliance. With respect to covered New York City employers, prior to November 1, they should identify the positions for which they will be advertising that could be performed, in New York City, and be sure to include a good faith estimate of the annual salary range or the hourly range for such positions in the applicable job advertisements. With this increased focus on pay transparency, it is clear that pay equity will be a critical issue for employers in the years to come. Employers are therefore well-advised to undertake efforts to ensure that they can demonstrate pay equity among their employees. Legal counsel can help ensure that, whether via an audit or other similar measure, employers are best positioned to defend future enforcement actions.