On September 17, 2023, New York State’s Pay Transparency Law went into effect requiring employers to be transparent with compensation ranges in all job advertisements. New York state is not the first state to adopt such legislation. In fact, there are seventeen other states throughout the country with pay transparency laws. The goal of pay transparency laws is to address systemic pay inequity and discriminatory wage-setting and hiring practices.
Covered employers with four or more employees are now required to include a range of pay for all internal and external job advertisements, promotion or transfer opportunities that will physically be performed, at least in part, in the state of New York. Additionally, a job description must be included in the posting when available. The law applies to opportunities advertised or performed outside of New York State that report to a supervisor or office in New York State.
Advertisements must include a good faith pay range. A good faith pay range is one that an employer legitimately believes they will pay at that time. When determining a good faith pay range, employers should take into consideration the budget, skills and experience they are willing to accept, market conditions and current employee pay levels. If, during the interview process, additional information is discovered that will impact the pay range, employers may adjust it. A best practice in this situation is to document the reason for the adjustment.
Pay ranges must include a minimum and maximum annual salary or hourly rate of compensation. If an employer is paying a fixed rate, such as $60,000 annually, the advertisement must list the fixed rate. Listing “$20+” is not permitted. Advertisements for strictly commission-based positions should clearly state the position is commission based.
If a posting is applicable to multiple geographical locations or multiple levels of seniority, a pay range for each location or level of seniority must be included. For example, if one customer service job advertisement is being used for three different locations, the employer should list the locations and the pay range for each.
The application of this law is straightforward for employers and has many benefits. Besides addressing wage disparities, it may also drive employee engagement and job satisfaction if your employees feel they are being compensated fairly among their peers and in the market. But what if they aren’t? Stay tuned, as I will be discussing this in a future post.
If you have questions or need help with a compensation analysis, compensation benchmarking, or job descriptions, contact LIHR Consulting.