Benefits and Compensation, HR Management & Compliance

NYC Releases Guidance on New ‘Salary Transparency’ Law

The New York City Human Rights Commission (NYCHRC) recently released guidance about the city’s new law requiring “salary transparency” in job advertisements for employees, interns, domestic workers, and some independent contractors. The law takes effect on November 1, 2022.

The guidance answered many, but not all, questions raised by the breadth of the legislation. Read on to understand how it will affect your recruitment efforts even if your company has a minimal presence in New York City.

Covered Employers

NYC Pay Transparency Law

The new law applies to all employers with four or more employees or one or more domestic workers covered by the New York City Human Rights Law (NYCHRL). As with the law’s other provisions, owners and individual employers count toward the four employees. For purposes of counting the number of employees, the law states:

  • “Natural persons working as independent contractors in furtherance of an employer’s business enterprise shall be counted as persons in the employ of such employer”; and
  • “The employer’s parent, spouse, domestic partner or child if employed by the employer are included as in the employ of such employer.”

Moreover, the guidance makes clear “the four employees do not need to work in the same location, and they do not need to all work in New York City.” In other words, if one of the employees works in the city, the workplace is covered.

While the NYCHRL covers “employment agencies” regardless of their size, it doesn’t apply to “temporary help firms” seeking applicants “to join their pool of available workers.” The guidance defines such firms as “businesses that recruit, hire, and assign their own employees to perform work or services for other organizations, to support or supplement the other organization’s workforce, or to provide assistance in special work situations.”

On the other hand, the guidance unhelpfully provides that “employers who work with temporary help firms must follow the new salary transparency law.”

The guidance says, “Covered employers should follow the new law when advertising for positions that can or will be performed, in whole or in part, in New York City, whether from an office, in the field, or remotely from the employee’s home.” The guidance confirms the law applies to an employer’s job listings for “full- or part-time employees, interns, domestic workers, independent contractors, or any other category of worker protected by the NYCHRL.”

Covered Job Listings

The guidance provides the new law covers “any advertisement for a job, promotion, or transfer opportunity that would be performed in New York City.” An “advertisement” is defined as “a written description of an available job, promotion, or transfer opportunity that is publicized to a pool of potential applicants.”

In addition, the advertisements are covered “regardless of the medium in which they are disseminated” and include internal bulletin boards, Internet ads, printed flyers distributed at job fairs, and newspaper ads.

The guidance appears to have created an interesting exception: “The law does not prohibit employers from hiring without using an advertisement or require employers to create an advertisement in order to hire.” Even without the use of a formal advertisement, however, employers may find it prudent to follow other aspects of the new law to show transparency and consistency in the event of an audit.

Minimum Job Ad Requirements

Per the guidance, employers must state “the minimum and maximum salary they in good faith believe at the time of the posting they are willing to pay for the advertised job, promotion, or transfer opportunity.” “Good faith” is defined as “the salary range the employer honestly believes at the time they are listing the job advertisement that they are willing to pay the successful applicant(s).”

Employers must include both a minimum and a maximum salary. The range cannot be open-ended. For example, “$15 per hour and up” or “maximum $50,000 per year” wouldn’t be consistent with the new requirements.

If an employer has no flexibility in the salary being offered, the minimum and maximum salary may be identical, for example, “$20 per hour.” Advertisements covering multiple jobs, promotions, or transfer opportunities can include salary ranges that are specific to each opportunity.

Definition of ‘Salary’

According to the guidance, salary includes the “base wage or rate of pay, regardless of the frequency of payment” expressed in an hourly wage or annual salary. But it does not include “other forms of compensation or benefits offered in connection with the advertised job, promotion, or transfer opportunity, such as:

  • Health, life, or other employer-provided insurance;
  • Paid or unpaid time off work, such as paid sick or vacation days, leaves of absence, or sabbaticals;
  • The availability of or contributions toward retirement or savings funds, such as 401(k) plans or employer-funded pension plans;
  • Severance pay;
  • Overtime pay; or
  • Other forms of compensation, such as commissions, tips, bonuses, stock, or the value of employer-provided meals or lodging.

Employers may include the additional information in advertisements about benefits and other forms of compensation offered in connection with the job, promotion, or transfer opportunity.

Takeaways

The NYCHRL’s scope is breathtaking. It applies to small employers with only one employee who works in New York City, including an individual working remotely. It also applies to employers merely seeking to engage an independent contractor, which normally isn’t paid a salary.

The stakes are high. The guidance reminds employers and employment agencies that civil penalties of up to $250,000 are possible for violations. In addition to amendments to the law, which are in the pipeline, stay tuned for the court challenges to follow.

Further, the NYCHRL is only one of several similar laws across the country, all of which have slightly different terms. You will want to ensure compliance and perhaps conduct a pay equity analysis to identify and fix “difficult to explain” discrepancies before an audit or claim. Consult with employment counsel on how to navigate the newest challenge.

Paul J. Sweeney is an attorney with Coughlin & Gerhart, LLP, in Binghamton, New York. You can reach him at psweeney@cglawoffices.com.