?With more employers allowing remote work anywhere in the country, a New York City law may compel companies outside the city to be more transparent about pay rates.
New York City joined other jurisdictions like California, Colorado and Washington in requiring employers to list salary ranges in all job postings. The city law took effect Nov. 1. The New York State Legislature also passed a pay transparency law, but it hasn’t yet been signed by Gov. Kathy Hochul.
The new pay transparency laws throughout the country aim to accelerate efforts to close gender and racial pay gaps, according to Lynne Anderson, an attorney with Faegre Drinker in Florham Park, N.J. “It’s starting to become more of a movement,” she said.
Impact on Remote Jobs
To fill remote positions, employers outside of New York City will have to comply with the city law if a New York City resident might take the job.
“A strict interpretation of the law suggests that if there is any possibility that some or all of a job may be performed in New York City, even remotely, the law is applicable. As such, an employer must carefully review whether there is a chance it may hire a remote worker living in New York City,” said Jason Habinsky, an attorney with Haynes Boone in New York City. “If the hiring of a New York resident is unlikely [because a local presence is needed elsewhere], an employer could take the position that compliance is not warranted.”
“Employers that do not already have employees in New York City need to be cognizant that employing a hybrid or remote worker in New York City could cause them to become covered under the law and require their compliance with its pay disclosure requirements,” said Alexandra Barnett, a lawyer with Alston & Bird in Atlanta.
For hybrid jobs, it may be difficult for employers to determine how much of the work might be performed in New York City. “At this point, it is not entirely clear how much work needs to be performed in New York City for the position to be performed at least in part in New York City,” Barnett said. “With the proliferation of remote and hybrid work, however, the potential certainly exists for a New York City resident to apply for and fill a remote or hybrid role, requiring an employer covered by the law to comply with its salary and wage disclosure posting requirements.”
There may be some leniency for first-time violations. “In this initial phase, we expect the New York City Commission on Human Rights to be particularly active in order to ensure that employers have implemented the required updates to job postings,” Habinsky said. “However, the commission has suggested that it will allow violating employers one strike and 30 days to cure an initial violation.”
Additional violations will have steeper consequences. “An employer may have to pay a penalty up to $250,000 for an uncured violation and any further violations. Individuals may also bring a private cause of action against an employer in court,” Habinsky noted.
Federal Action
There’s been pay transparency action at the federal level, as well. In 2021, President Joe Biden issued an executive order that prohibits federal agencies from seeking or relying on an applicant’s salary history during the hiring process to set pay. The Office of Personnel Management recently announced that it anticipates issuing a proposed regulation that will address the use of prior salary history in the hiring and pay-setting process for federal employees.
“The Biden administration has been very clear that pay transparency and pay equity is a priority,” Anderson said. She predicted that the federal government will require more pay data reporting.
Applicants and new hires won’t be the only ones influenced by pay transparency and pay equity. It’s likely that your current employees will notice the salary ranges in job ads and compare those to their own pay. HR representatives will have to explain the factors that determine an employee’s pay, such as experience, skill sets and benchmarking to market.
“When your incumbents see this posting and say, ‘I’ve been here for 10 years doing this job, and I’m at the low end of this posting,’ ” Anderson said, they will probably ask for a raise.
