On September 17th New York State joined the City, Westchester County and Ithaca, along with 7 other states, and enacted a Pay Transparency Law.
The law will require that all companies and small businesses with 4 or more employees, make public in advertisements and job postings, compensation information for all positions within their respective business, including bonuses, pay raises and benefits.
The objective of the law is to close the wage gap for women and people of color and ensure compensation is based solely on skill. Women made 83 cents for every dollar made by men, 64 cents for black women, and 57 cents for Hispanic women according to 2020 statistics from the U.S. Department of Labor.
New York joins California, Rhode Island and Washington in passing the transparency law in 2023.
According to the law, a New York business with 4 or more employees where work will be physically performed in the state, must post both the minimum and maximum annual salary or the hourly pay range when posting a job or a promotion. The law also applies to remote work outside the state if a superior or supervisor is located in New York State. Pay Transparency also requires employers post a full job and promotion description.
To many, wage disparities deepen inequity in our society and the New York State Pay Transparency Law is an attempt to address this issue, along with empowering the average worker. To that end, a business must also reveal if pay is completely commission-based, and it makes it illegal to retaliate against employees for discussing and comparing pay with other employees.
As well intentioned as it is, there is some vague language in the law which could lead to compliance issues on the part of businesses. For one, pay transparency can be demonstrated in more than one way – one business may share specific pay rates for every job, while another just for open positions. It is also not clear if a business outside of New York must adhere to the law if they are advertising a fully remote job, and there does not seem to be any requirement to keep a record of the pay for each job over previous years.
This ambiguity in the law could lead to compliance challenges, particularly among small businesses who may not know about the law because they are already overburdened with other requirements and administrative tasks.
GAC is advising its clients to avoid issues by examining what their other employees make before posting job openings or promotion opportunities. We also remain vigil for additional guidance to come from New York State as the law’s full impact is felt.
In the interim, it is a $1,000 fine for a business’ first violation, $2,000 for the second and $3,000 for the third.
Pay transparency to close the wage gap and empower workers is a worthy and honorable goal. Until further guidance is offered, businesses should air on the side of extreme compliance.
