Pay Transparency Law goes into effect in NYS on Sunday

Beginning Sunday, employers across New York State have to list salary or salary range for job postings. It’s called the Pay Transparency Law, and was signed by Governor Kathy Hochul in December 2022.

Advocates said the goal is to empower job seekers, while addressing pay inequity.

Jared Cook, attorney with Tully Rinckey, said the law does two things. It provides more transparency for job postings and pay. And, it requires employers to keep records of all postings, so they can prove they’re following the law.

Cook said the new law will help applicants know exactly what they’re applying for. He said it’s also beneficial for employers who pay competitive wages.

“If you are an employer, you’re advertising for a job, putting up a posting, you got to make sure you have the pay range in there, you gotta also make sure that you’re not just throwing up a placeholder, to say, well you know anywhere between $15,000 and $100,000, you have to make a good faith effort.”

So what led to Hochul signing this into effect?

Well, for years, Cook said he’s worked with people who felt misled by applications, or who went through rounds of interviews, only to be offered salaries lower than what was advertised.

“That happens all the time,” he said. “Also a lot of cases where they’ll get the job, negotiate a salary, and find out years later, that they’re being paid less for doing the same job as somebody else.”

Even in 2023, Cook said studies still show people are paid differently based on gender and race, whether the employer is aware of it or not.

“If you look across the board and see what are we paying folks for these jobs, you often will see that an unconscious bias that will come out,” he said. “It will be a lot easier to know, if you’re being paid less than other people doing the same work, but just maybe the skin color is different or gender is different.”

Not everyone wants to jump on board this fast, though. In a statement, the Rochester Chamber of Commerce’s senior director of HR Kathy Richmond said it remains to be seen whether the new law will make a difference in pay inequity and discrimination.

“But it will certainly start some conversations that hopefully lead to a better workplace, which is good for business,” said Richmond.

Richmond said employers will have to explain why new employees may be paid more than someone who’s been there for several years. And, morale will likely be impacted, as employers work to convince employees they’re valued, regardless of pay rate.

Full statement from Rochester Chamber of Commerce:

NYS Pay Transparency rules go into effect this Sunday, September 17. I expect there are more than a few employers that have done little to prepare for this. NYS just published their proposed rules yesterday, so until now, employers had to review the regulations or law firm articles to learn more. And then they either had to figure it out themselves, work with an attorney to understand the requirements (very costly), talk to an organization like the chamber for guidance, or not do anything. With all that HR professionals and others with HR responsibilities already have on their plates, I suspect all too many are waiting until they have a job opening to figure out what they need to do.

For many years, employers for the most part viewed pay ranges as confidential and a competitive advantage. Though of course some employers felt it was important for employees to know why they were being paid a certain rate. Pay compression continuously worsened due to employers having to comply with NYS minimum wage and salary threshold increases every year. The annual increases have been especially difficult for nonprofits who were required to pay their employees more to comply with the minimum wage increases but their funding didn’t see corresponding increases.

As the war for talent progressed, and then COVID hit, many employers were forced to offer higher pay rates than they normally would just to get people in the door. The gap between long time employees and new hires was rapidly shrinking and then was gone. However, both profits and nonprofits alike have had difficulty affording further adjustments to address pay compression when it’s all they can do to meet the minimum wage and salary threshold changes, not to mention ever-increasing benefits costs, higher costs of goods and services, you name it.

That brings us to NYS pay transparency which will put some employers in the hot seat once employees see the good faith ranges employers are required to include in job postings starting September 17th. There will be hard questions being asked and employers will have to try and explain why new employees may be paid more than someone that has been with them for several years. Morale is likely to be impacted as a result. And the employer will need to work hard to convince those employees that they are indeed valued regardless of their pay rate and that the organization will do what they can to make it right, though it may take time. Employers are simply stuck between a rock and a hard place. And things aren’t going to get any easier. The U.S. Department of Labor is now proposing a significant increase in the federal salary threshold for exempt employees.

So whether or not NYS pay transparency will ultimately make a difference with systemic pay inequity and discriminatory wage-setting and hiring practices remains to be seen. But it will certainly start some conversations that hopefully lead to a better workplace which is good for business.