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Show Me the Money: Getting Prepared for New York’s Wage Disclosure Law

On September 17, 2023, New York Labor Law Section 194-b will require covered employers to disclose wage ranges in job, promotion, and transfer advertisements for internal or public viewing for any position that will be physically performed, at least in part, in the state of New York (NY) or report to a supervisor, office or other worksite in NY.

The law also requires that job descriptions be included in each employment opportunity posting if one exists. Although the law does not require employers to create a job description that does not already exist, having well-written, up-to-date job descriptions, that accurately represent the essential functions of the position, along with the requisite skills and experience to perform the job, has long been best practice guidance for employers.

Applicability of the Law

NY’s wage disclosure requirements pertain to employers with four or more employees and positions that will be physically performed (fully or partially) in NY, as well as positions that will physically be performed outside of NY but report to a supervisor, office, or other work site in NY. That means the law may apply to remote workers in other states if those workers report to a NY location or supervisor who resides in NY. Note: Temporary help firms are specifically excluded from the definition of employer for purposes of this law.

Basic Requirements

The basic requirement under this law is to disclose the range of compensation when a position is being “advertised” internally and/or externally. The law defines advertise as “to make available to a pool of potential applicants a written description of an employment opportunity both for internal or public viewing, including electronically.” Accordingly, there is no obligation to disclose wage ranges outside of when posting/advertising an open position.

The “range of compensation” means the minimum and maximum annual salary or hourly range of compensation for a job, promotion, or transfer opportunity that the employer in good faith believes to be accurate at the time of the posting of an advertisement for such opportunity. If a position will be fully commission-based, the advertisement must state that. If there is a set rate (hourly or salary) for the position, that amount must be stated (e.g., $18/hour).

Potential Pitfalls to Avoid

While the law does not place limits on the breadth of a pay range, or specifically limit an employer from deviating from the stated range, the spirit of the law is transparency and a “good faith effort.” Although that term is not specifically defined under NY State law, generally speaking, you should provide the range that at the time of the posting, you believe you are willing to pay for the position. While posting a broad salary range might seem like a logical “quick fix” for complying with the requirement, such practice may inadvertently create other issues, including reputational risk for the employer. An overly broad range may create distrust or skepticism with candidates, potentially jeopardizing the candidate pool and your organization’s ability to attract top talent. Current employees in the same/similar position may also question their own salary based on the range noted in the posting.

Furthermore, an overly wide range may result in candidates expecting higher compensation than the organization is willing to pay based on the individual’s experience, creating a sense of disappointment and potentially rejection of an offer if it is made at the lower end of the range presented.

At a minimum, a best practice when posting a salary range would be to settle on what you would, in good faith, pay for the role. In setting this range, consider the external market data and the current pay of internal employees in the role. From there, you can calculate a range that goes 10 to 20 percent in both directions. This creates a narrower range that will provide a realistic expectation for applicants and assist with compliance in the spirit of these pay transparency laws.

Penalties for Non-Compliance

While you may not like the new pay transparency requirements or the additional administrative burden it puts on employers when posting positions, the penalties for non-compliance can be steep, particularly if you do a lot of recruiting/hiring, and may create exposure for legal costs beyond penalties under Section 194-b.

Employers that violate the NY Wage Disclosure law are subject to civil penalties of $1,000 for a first violation, $2,000 for a second violation, and $3,000 for a third or any subsequent violations.

Additionally, considering the requirement under this law also relates to other pay equity laws, including NY’s Equal Pay Act, the federal Equal Pay Act and Title VII of the Civil Rights Act, additional claims of pay discrimination may be filed with various federal and state agencies, such as the NY Human Rights Commission or the Equal Employment Opportunity Commission (EEOC). If a claim becomes a lawsuit, there may be additional fines, legal costs, business resources allocated to the investigation and resolution of the complaint, as well as reputational risk/damage to the employer’s brand. Lawsuits can be lengthy and time-consuming to resolve, even if the employer succeeds in defending the case.

NY Employers are Not Alone

Since 2018, eight other states, including California, Colorado, Connecticut, Hawaii, Maryland, Nevada, Rhode Island and Washington have passed wage range transparency laws and it is likely this list will continue to grow.

Furthermore, employers may be subject to local pay transparency laws, such as those in Jersey City, NJ, Cincinnati and Toledo, OH, New York City, City of Ithaca, NY and Albany and Westchester Counties in NY.

Recommendations on Next Steps

So, where does that leave employers with respect to hiring in NY? With just over a month before the new requirements take effect, now is the time to ensure you are positioned for compliance.

Evaluate your recruiting procedures to ensure the requirements for including the compensation range, and a copy of the job description, are incorporated into both your internal and external hiring processes.

Conduct salary benchmarking to ensure that wage ranges for open positions are in line with market data for similar jobs in your industry/geographic area, as well as an evaluation of wages for current employees in the role. This will not only help establish the company’s “good faith effort” for the posted wage range but will also help ensure positions are attractive from a compensation perspective and shed light on any potential compensation issues with current employees.

Review and update job descriptions if they exist. If you do not currently have job descriptions for each position, consider using this time to develop them. As previously noted, having up to date job descriptions, that accurately reflect the essential functions of the position, as well as physical demands, working conditions and requisite skills/experience, has long been an HR best practice to assist with recruitment, performance management, reasonable accommodation, and leave administration processes. Job descriptions are fundamental to help ensure pay ranges are consistent with the knowledge, skills, ability and experience needed for the job, and to help employers account for any differentials in pay.

If you are a multi-state employer, consider whether you want to take a state-by-state approach to compliance or, if it makes sense to provide wage ranges and benefit information to all applicants (or when posting internal opportunities), whether required by the specific state or not. While the latter may be easier by establishing consistency with recruiting procedures across all states, either approach will require active monitoring of pending and new legislation to ensure that you are meeting the minimum requirements of each jurisdiction’s law, as it applies to your business.

Finally, provide training for your recruiters and hiring managers on wage disclosure requirements, as well as other compensation-related regulations, such as prohibitions on salary history inquiries.

How HR Works Can Help

Managing implementation of new federal and/or state employment legislation can be daunting for employers and HR professionals. HR Works is here to help!

HR Works offers comprehensive compensation and pay equity services and has developed a collection of compensation resources including:

  • State Law Comparison Chart
  • How-To Guide for Conducting a Job Analysis
  • Managing Effective Employee Compensation Systems Checklist
  • 10 Steps for Developing a Compensation Strategy

We have also hosted several webinars on the topic of compensation, with the most recent being Show Me the Money: Preparing for New York’s Wage Disclosure Law.

For more information about our Compensation Services or to learn how HR Works can support you with complying this or other state-specific pay laws, contact us today.

HR Works, headquartered in Upstate New York, is a human resource management outsourcing and consulting firm serving clients throughout the United States for over thirty years. HR Works provides scalable strategic human resource management and consulting services, including: affirmative action programs; benefits administration outsourcing; HRIS self-service technology; full-time, part-time and interim on-site HR managers; HR audits; legally reviewed employee handbooks and supervisor manuals; talent management and recruiting services; and training of managers and HR professionals.