New York is about to pass a series of city and state laws requiring employers to list pay scales on job postings. The New York City law will go into effect Nov. 1, while the state bill, which the state legislature passed in June, is currently awaiting Governor Kathy Hochul’s signature. As the 650,000 businesses that call New York home begin to update their hiring practices, they can look to Colorado, which passed a similar law in January of last year, as a model.
First, companies with large pay gaps for the same title should prepare for a backlash and possible exodus of workers. Many Colorado employees realized they were severely underpaid when the Pay Transparency Act was signed into law.
“Some Colorado clients we’ve worked with have faced the backlash of what happens when you advertise a job for a different pay scale than what your current employees are already earning,” says Bradley Bartolomeo, employment law attorney. work and partner in the law firm Lewis Brisbois.
Bartolomeo advises its New York clients to check salaries before the law takes effect to better understand current salary ranges and the salaries they will need to offer candidates to compete in the talent market. The most effective audits are forward-looking, he says. Companies should determine how much they expect to pay for a role two years from now and make it the high end of the stated compensation range. They should also be transparent with current employees earning less than the listed top-end salary about what is needed to earn a higher salary. These criteria can be based on qualifications such as experience, education or performance once in the job.
New York and Colorado laws also require employers to provide a “good faith” pay scale, which Gibson Dunn partner Gabrielle Levin says has yet to be adequately defined or adjudicated by a court. But she warns her clients to be honest about a position’s going rate to avoid breaking the law.
It should be noted that New York law has implications for promotions, which are considered offers of employment. “One of the challenges employers in Colorado faced was how to advertise a promotion and why they would need to advertise a promotion if a current employee fulfilled it,” Bartolomeo says. New York companies won’t have to post jobs when employees are promoted, such as from sales manager to senior sales manager. However, if an employer posts a written description of this role, even just on an internal job board, they must disclose the salary range.
Levin warns that the law may extend to informal postings soliciting candidates. For example, an employee who posts on LinkedIn that they are looking to fill a software engineer position and does not include a salary range may be breaking the law.
The law also applies to any work that can reasonably be done in New York, including remote work. Companies cannot circumvent the law by excluding New York residents from jobs. Cigna, Nikeand Airbnb were among the employers who tried to do it in colorado and were tried in violation of state law. After the Colorado Department of Labor and Employment cracked down on the practice, the number of job postings for remote positions that violated the law dropped by 90%, a spokesperson said.
States are implementing pay transparency laws to address pay inequality. But because these laws apply to job postings rather than all jobs at a company, their impact on the wage gap won’t be immediately measurable, says Colorado labor attorney Justin Plaskov. “The more turnover, the more jobs posted, the greater the impact will be over time.”
Women earn about 73 cents for every dollar white men earn, according to a National Center for Women’s Rights March report. That number gets worse for Black and Latina women, who earn 58 cents and 49 cents, respectively.
While the Pay Transparency Act could be a valuable legislative effort to narrow gender and racial pay gaps — and deter companies from offering significantly higher wages to the privileged few — some say it is more effective when combined with other tools. “The best antidote to pay gaps in a workplace is a collective bargaining agreement,” said a spokeswoman for New York State Senator Jessica Ramos, who sponsored the bill. Fortune. “But for employees who are not represented in the workplace by a union, creating a system of transparency will make it easier to establish equal pay for equal work.”
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