Information contained in this publication is intended for informational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.
The New York City Commission on Human Rights (NYCCHR) has published a fact sheet providing guidance on the heavily anticipated salary transparency law, which will take effect on May 15, 2022. New York City employers with four or more employees (including independent contractors) will have to include the minimum and maximum salary in each job posting or advertisement. The text of the law left open several questions regarding its geographic scope as well as the law’s application to remote work. The fact sheet provides some clarification of the new law’s requirements and parameters.
To Which Employers Does the Law Apply?
All employers that have four or more employees, or at least one domestic worker, are covered by the New York City Human Rights Law (NYCHRL), including the new salary transparency requirements. The Commission’s fact sheet has now clarified that the four employees do not need to work in the same location, nor do all of them need to work in New York City. As long as one employee works in New York City, an employer is considered to be a “New York City employer” under the law. Temporary help firms are still exempted from the law, but employers that work with temporary help firms are not.
To Which Applicants Does the Law Apply?
The posting requirement applies to job postings for applicants of any kind, including full-time employees, part-time employees, interns, domestic workers, independent contractors, or any other kind of employee protected by the NYCHRL.
Which Job Advertisements are Covered Under the Law?
The text of the law provides that all advertisements, promotions, or transfer opportunities for jobs that are to be performed in New York City are covered by the law and require a salary range in the job posting itself. The Commission has defined an “advertisement” as “a written description of an available job, promotion or transfer opportunity that is publicized to a pool of potential applicants.” The media in which such advertisements are disseminated are not fully defined, but include internet ads, internal bulletin boards, printed flyers at job fairs, and newspaper ads. The Commission has not clarified whether the use of a search firm or targeted recruitment efforts will be considered a job advertisement.
Of importance, the Commission’s fact sheet clarifies that the law does not prohibit employers from hiring without an advertisement, nor does it require employers to create an advertisement as a prerequisite for hiring into any particular position.
What is the Geographic Scope of the Law?
The murkiest aspect of the salary transparency law had been its territorial reach, and if it would be applied to remote work. The fact sheet now provides:
Covered employers should follow the new law when advertising for 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 the employee’s home.
Consequently, it appears the city has taken the position that if a job can be performed in New York City, regardless of the geographic location of the applicant, and where the job is ultimately performed, if a New York City employer is seeking to fill such a role with remote work, a salary range must be disclosed.
What Information Must Be Included in a Job Advertisement?
Employers must provide the minimum and maximum salary in each job posting, defined as the salary range an employer, in good faith, is willing to pay at the time of posting for the advertised job, promotion, or transfer opportunity. In the fact sheet, the Commission has defined “good faith” as the range of the salary the employer honestly believes it will pay a successful applicant.
Employers cannot include open-ended ranges in their postings, with language such as “$15 per hour and up” or “maximum $50,000 per year.” However, if there is no flexibility in the salary to be offered, an employer may disclose the same amount for the minimum and maximum range by simply providing what the fixed hourly rate or annual salary will be.
The fact sheet makes it clear that salary includes only the base wage or rate of pay, regardless of how often an employee is paid. Salary does not include other forms of compensation or benefits offered in connection with a position, such as health benefits, PTO, vacation time or employer-sponsored retirement or saving plans, such as a 401(k). This differs significantly from the similar wage transparency law in Colorado. Employers may but are not obligated to include such additional information. Affirmatively including this information may make sense in instances where equity and bonuses are a significant portion of compensation.
What are the Penalties for Noncompliance?
The NYCHRL provides that a private right of action can be brought within three years for compensatory and punitive damages, attorney’s fees, and costs. In addition, the Commission is authorized to impose civil penalties on its own up to $125,000, and up to $250,000 for willful violations. The fact sheet notes that in addition to these monetary fines, New York City employers may also be required to amend their advertisements and postings, create or update policies, conduct training, provide notices of rights to employees or applicants, and engage in other forms of affirmative relief.
While the Commission’s fact sheet clarifies several of the questions that employers have been pondering since this law was passed, outstanding questions remain. It is unclear if employers will be able to provide links to pages that detail compensation information instead of including such details within the text of the job posting itself, or exactly what specifics will be required in the posting and salary information for promotions and internal transfers.
Is an Amendment on the Horizon?
On March 23, 2022, the New York City Council introduced an amendment to the salary transparency law that would revise the current version to apply only to employers with 15 or more employees. Further, the amended version would exclude from the law’s scope employer posts that do not advertise for a specific position (general calls for applications), and ads for positions that are not required to be performed in NYC, possibly walking back the position in the fact sheet regarding remote work. This amendment would also extend the effective date to November 1, 2022. As of the date of this article’s publication, the amended law has been referred to the Committee on Civil and Human Rights for review and recommendation. If the amendment is passed, it would substantially narrow the scope of the law.
As signaled by this proposed amendment, it appears that at least some city councilmembers may consider the law overbroad be open to narrowing it. Although it is possible that the salary transparency law could be susceptible to legal challenge, employers should prepare themselves for the May 15, 2022 effective date since failing to comply would risk fines up to $250,000.
Recommendations for Employers
Employers should begin preparing for this law’s effective date by making sure that human resources is informed of its requirements. In addition, employers should take steps to document and determine salary ranges for each job classification using existing data or projecting these figures on a good-faith basis. Employers can also take this time to fine tune their policies regarding the publication of internal promotion and transfer opportunities, as well as to develop internal systems for handling employee requests for salary reviews, as these wage disclosures will likely prompt discussion within the current employee population. Ultimately, keeping records regarding pay decisions will be crucial to defend against any pay equity claims that may arise from these salary transparency requirements.