A new law requiring companies to include salary ranges in their job postings takes effect in New York City today. It’s designed to help reduce overall pay disparity by making the hiring process for businesses with four or more employees more transparent.
Covered employers must include a “good faith salary range” as a part of each job posting, including a minimum and maximum salary, according to media reports. Although there’s no penalty for a first offense, businesses could face fines of up to $250,000 if a violation is not addressed within 30 days.New York City's new pay transparency law is designed to help reduce overall pay disparity by making the hiring process more transparent. #HR #HRTech Click To Tweet
New York isn’t the first jurisdiction to adopt such a law. Colorado, Connecticut and Nevada, for example, began requiring ranges on job postings last year. During 2023, similar laws are scheduled to take effect in California, Rhode Island and Washington State.
‘Changing the Dynamics’
Recently, The Wall Street Journal said such laws “are changing the dynamics of hiring and looking for a job.” Candidates approve of such rules because they help them better target their job search, the Journal said. In addition, compensation experts told the newspaper visible pay ranges can help workers determine whether their current compensation is in line with the market.
Even managers like the approach, the Journal said. Many say posting salary information saves them the time and hassle that bubbles up whenever they deal with candidates whose pay expectations are out of range.
New York City’s law applies only to employers with four or more workers. U.S. News & World Report says they account for one-third of employers in the city, but roughly 90% of workers, according to state Labor Department statistics.
While much of the discussion around these laws has focused on the dynamics between employer and candidate, a number of experts say their genesis lies in the need to reduce the disparities in pay between White men and women in different ethnic groups.
In 2020, women earned 84% of what men were paid, according to the Pew Research Center.
“The intention is to chip away at pay inequity,” New York City Counselor Nantasha Williams told the Daily News.
Already, the movement toward required pay disclosure is having an impact, even on organizations with employees outside of New York and other jurisdictions. “American Express is joining the small but growing number of companies choosing to post salary ranges with job listings across the U.S., even where doing so isn’t required by law,” reports Fortune.
“Although the law is only applicable within New York City, we have extended this same level of transparency across the U.S. to ensure a consistent experience for job seekers interested in finding their place on our team,” the company told Fortune in a statement. Meanwhile, a survey by Willis Towers Watson found that most companies are at least considering pay disclosure, Fortune said.