Introduction
New York City employers be aware: A new “NYC Salary Disclosure Law” will soon require employers to include a good faith salary range for every job, promotion, or transfer opportunity advertised. While the NYC Salary Disclosure Law is scheduled to take effect on May 15, 2022, it may now be pushed out to November 1, 2022 due to a recently introduced bill that would amend the new law, including the effective date.
The following article analyzes what employers need to know to ensure compliance with the NYC Salary Disclosure Law (Int. No. 1208-B), as currently in effect and as further elaborated by the NYC Commission on Human Rights (NYCCHR) in its recently issued guidance (NYCCHR Guidance). This client alert also discusses the proposed amendments to the law under the new bill (Int. No. 134).
Background
The NYC Salary Disclosure Law is an amendment to the New York City Human Rights Law and is administered and enforced by the NYCCHR. The new law was passed by the New York City Council on December 15, 2021 and became enacted into law on January 15, 2022, when the mayor of New York City neither signed nor vetoed the new law by that date. Pursuant to the terms of the law, the salary disclosure requirements take effect 120 days after becoming law, i.e., on May 15, 2022.
Covered Employer
Employers that have four or more employees, with at least one employee working in New York City, are covered by the new law (employers with one or more domestic workers are also covered by the law). For purposes of counting “employees” toward the four-employee threshold for coverage, the law counts independent contractors (defined as natural persons working as independent contractors in furtherance of an employer’s business enterprise), as well as owners, individual employers, and certain immediate family members of the employer.
Employment agencies, defined under the NYC Human Rights Law as “any person undertaking to procure employees or opportunities to work,” are also covered by the new law regardless of their size. Temporary staffing firms are exempt from the new law, to the extent that they seek applicants to join their pool of available workers. Employers who work with temporary help firms, however, must follow the new disclosure requirements.
Covered Jobs and Advertisements
The new law applies to any advertisement for a job, promotion, or transfer opportunity 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.” The NYCCHR Guidance clarifies that the requirement applies to job postings seeking full- or part-time employees, interns, domestic workers, independent contractors, or any other category of worker protected by the NYC Human Rights Law.
An “advertisement” is a written description about an available job, promotion, or transfer opportunity publicized to a pool of potential applicants, regardless of the medium used to disseminate the writing. Covered advertisements include: (i) posting on internal bulletin boards, (ii) internet advertisements, (iii) printed flyers distributed at job fairs, and (iv) newspaper advertisements. In a helpful clarification, the NYCCHR Guidance advises that the new law does not prohibit employers from hiring without using any advertisement, nor does it require employers to create an advertisement to hire.
Required Information In Advertisements
The employer must state a “good faith” minimum and maximum salary for the advertised job, promotion, or transfer opportunity – in other words, the employer must honestly believe, when it is listing the advertisement, that it is willing to pay the listed salary range to the successful applicant.
The salary range cannot be open ended (e.g., “$15 per hour and up” or “maximum $50,000 per year”). The minimum and maximum salary range may be identical if the employer has no flexibility in the salary (e.g., “$20 per hour”).
The “salary” includes the base wage or rate of pay, and includes positions that are paid an hourly wage or on a salary basis. The NYCCHR Guidance advises that “salary” does not include other forms of compensation or benefits, such as employer-provided health, life, or other insurance, paid or unpaid paid time off (including paid sick or vacation days or leaves of absence), the availability of or contributions towards 401(k) plans or employer-funded pension plans, severance pay, overtime pay, commissions, tips, bonuses, stock, or the value of employer-provided meals or lodging.
Enforcement and Penalties
Aggrieved individuals may seek to enforce their rights under the new law in the same manner as other rights under the NYC Human Rights Law, i.e., by filing a complaint with the NYCCHR or in court. The NYCCHR Guidance notes that, in addition to NYCCHR investigations of complaints filed by the public, the Law Enforcement Bureau may also initiate its own investigations based on testing, tips, and other sources of information. Employers and employment agencies found to be in violation of the new law may be liable for monetary damages to affected individuals and for civil penalties of up to $250,000. Covered entities may also be required to engage in affirmative forms of relief such as amending advertisements, creating or updating policies, conducting training, and providing notices of rights to employees or applicants.
Proposed Amendments to the NYC Salary Disclosure Law
A recently introduced bill would make a number of amendments to the NYC Salary Disclosure Law, particularly in three significant ways. First, it would delay the effective date of the new law to November 1, 2022, giving employers more time to prepare. Second, it would amend the law to cover only employers with at least 15 employees. Third, it would cover advertisements only for jobs that must be performed, at least in part, in New York City. Thus, if a job could be performed entirely remotely anywhere, including outside of New York City, then the new bill would not require New York City employers to provide salary ranges when advertising for the position.
Considerations for Employers
Covered NYC employers with at least four employees, including at least one employee in NYC, should prepare to comply with the new NYC Salary Disclosure Law by May 15, 2022. In addition to preparing to identify minimum and maximum compensation ranges for advertised positions, employers may also wish to prepare for the effect of the disclosures on current employees. The new law and resulting disclosures will likely prompt greater awareness and discussion of wages among employees, which could potentially lead to complaints of unfairness or even discrimination, as well as retention issues for those hired at starting salaries reflecting a different job market at the time of hire.
While beyond the scope of this alert, in addition to the NYC Salary Disclosure Law, pay transparency laws have been enacted in Colorado, California, Connecticut, Maryland, Nevada, Rhode Island, Illinois and Washington. No other legislation has gone as far as the Colorado and NYC laws in terms of requiring compensation and, in the case of Colorado, benefits information in a job posting. Most require disclosure of wage ranges only upon request, although a few create affirmative obligations on employers. In addition, pay equity laws have been expanded in several states including Massachusetts, California and New York. An internal audit to assess compliance with pay transparency and pay equity laws (e.g., comparing cash compensation, benefits and equity compensation for employees that perform comparable work) may be prudent to assess whether employees are paid appropriately relative to other employees and to new hires. Conducting these audits with counsel may provide important privilege protections.
Even if the currently enacted NYC Salary Disclosure Law is ultimately scaled back by the new bill, the new law is part of a growing trend of salary disclosure laws that seek to increase pay transparency in an effort to promote pay equity. NYC employers should be prepared not only to provide greater transparency with respect to wages but also to handle greater awareness and discussion of wages among its workforce.
If you have any questions or need assistance implementing compliance with the NYC Salary Disclosure Law, please contact Albert J. Solecki, Jr., Eric D. Roth, Jeehye Park, Yoojin DeNiro or any other Goodwin employment law specialist.