November 02, 2022

New York City's Path to Pay Transparency: New Law Takes Effect

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Key Takeaways

  • New York City's Pay Transparency law is now in effect and impacts NYC employers with four or more employees and at least one employee working in the city.
  • Covered employers are now required to include the lowest and highest salaries it believes in “good faith” it would pay for the advertised job, promotion, or transfer at the time of the posting.

New York City employers with four or more employees and at least one employee working in the city must now comply with the NYC Pay Transparency Law (Int. 134-A). On May 12, 2022, New York City Mayor Eric Adams signed Int. 134-A into law, which set an effective date of November 1, 2022. The law requires covered employers to include a salary range the employer honestly believes in "good faith" it will pay the successful candidate at the time of posting. The salary range must be included in advertisements for job, promotion, and transfer opportunities. While NYC will not impose a fine for a first violation, if an employer fails to cure the first violation or commits subsequent violations, the employer may be subject to civil penalties of up to $250,000.00. 

For Transparency: Background of the Law

On January 15, 2022, the New York City Council enacted a bill amending the New York City Human Rights Law to require employers to state the minimum and maximum salary for any advertised position located in New York City. This law—originally effective May 15, 2022— applies to all New York City employers with four or more employees, including independent contractors, in the past year. The law also extends its application to employment agencies, employers, employees, or agents thereof who advertise a job, promotion, or transfer posting. This law follows a similar trend of wage transparency legislation enacted in other jurisdictions such as California, Colorado, Connecticut, Maryland, Rhode Island, and Washington.

In effect, an employer's failure to advertise a job, promotion, or transfer opportunity with the position's minimum and maximum salary in the advertisement will constitute an "unlawful discriminatory practice" under the New York City Human Rights Law. An employer must include the lowest and highest salaries it believes in "good faith" it would pay for the advertised job, promotion, or transfer at the time of the posting. There are limited exceptions to the requirements. For example, the law will not apply to job postings by staffing firms or temporary firms because these entities currently provide this information to candidates post-interview pursuant to the New York State Wage Theft Prevention Act.

Version 134-A: Mayor Adams Signs Amendments into the NYC Pay Transparency Law

On March 24, 2022, two New York City Council members introduced a bill (Int. 134) which sought to amend the Pay Transparency Law. One month later, on April 28, 2022, the New York City Council passed "Version A" of the law (Int. 134-A). On May 12, 2022, Mayor Eric Adams signed Int. 134-A into law.

Int. 134-A amends the Pay Transparency Law and denotes that the law applies to employees who are paid hourly or through an annual salary. The amendments indicate that the law does not apply to positions that cannot or will not be performed in New York City. Further, Int. 134-A sets forth that a person may only bring a lawsuit against an employer under this law if that individual is a current employee who is bringing an action against their employer for advertising a job, promotion, or transfer without posting a minimum and maximum hourly wage or annual salary. Critically, Int. 134-A imposes a $0 fine as a penalty for the first violation of this law. Upon receipt of the New York City Commission on Human Rights' (NYCCHR) notice of a violation, employers have 30 days to cure the violation. Int. 134-A also moved the effective date of the Pay Transparency Law from May 15, 2022 to November 1, 2022.

Guiding the Path to Transparency: NYCCHR Releases Guidance

On March 22, 2022, the NYCCHR issued guidance on the Pay Transparency Law to aid employer compliance. The NYCCHR updated its fact sheet on May 12, 2022. This guidance specifies the law would apply to all employers with four or more employees as long as at least one of the employees works in New York City. Further, the guidance defined "advertisement" as "a written description of an available job, promotion, or transfer opportunity that is published to a pool of potential applicants" and detailed that advertisements are covered under the law despite the medium used for dissemination. Specifically, the guidance indicated the law does not prohibit employers from hiring without using an advertisement. Therefore, the law does not require employers to create advertisements in order to hire.

Additionally, the guidance indicates that covered employers should abide by this law when advertising positions that, whether in whole or in part, will be performed in New York City from an office, in the field, or remotely from the employee's home. The guidance further 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)." As such, employers must identify a range in the advertisement that includes a minimum and maximum salary for each position posted. For example, an advertisement that reads "$20 per hour and up" or "maximum $70,000 per year" does not comply with the requirement.

Further, the guidance details that "salary" only includes the base rate of pay or wage regardless of the frequency of payment. "Salary" does not include any other forms of compensation or benefits related to the advertised job, promotion, or transfer opportunity. Nevertheless, employers maintain the option to include such additional information. Lastly, the May 12 guidance details that if an employer commits a first violation and does not cure such violation, the employer may be subject to paying civil penalties of up to $250,000.00.

Now that Int. 134-A has become effective, employers should anticipate updated guidance from the NYCCHR for further clarifications to facilitate compliance.

What to Do Now?

Starting November 1, 2022, New York City employers must comply with the requirements of Int. 134-A. At this time, employers should strive to understand the components of the law. To remain competitive, employers should review current salary ranges among various positions and determine whether to make changes in order to retain current employees and attract new candidates. Employers may also want to consider a pay audit because employees will become aware of pay bands as various companies begin to include the salary ranges for their advertised employment opportunities. Lastly, employers should stay current with regulatory guidance from the New York City Council to best comply with the law and to best train human resources personnel and management on the implications of the law.

Pending State Legislation

New York State employers should also become familiar with the implications of the NYC Pay Transparency Law's state law equivalent (Bill S9427). On June 3, 2022, the New York legislature passed Bill S9427 which, if signed by Governor Kathleen Hochul, will become law. The State Bill is very similar, but differs in that it 1) applies statewide, 2) includes mandatory job descriptions (if they exist), 3) explicitly requires employers to maintain necessary records (i.e., history of compensation ranges), 4) protects current employees and applicants, and 5) includes a provision regarding commission-based opportunities.

Buchanan's labor and employment team is closely monitoring updated guidance from the NYCCHR as well as the status of the New York State Bill S9427 and will continue to keep you informed. Contact us if you have any questions regarding compliance with the NYC Pay Transparency law or how to prepare to comply with the state law equivalent.

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