How will New York’s pay transparency laws affect employers? originally appeared on Quora: the place to gain and share knowledge, empowering people to learn from others and better understand the world.
Answer by Kara Govro, Chief HR Legal Expert at Mineral, on Quora:
As most employers in New York are probably aware, beginning September 17, 2023, those that have four or more employees (located anywhere) will be subject to a new pay transparency law. While it has a big impact, the law itself is quite simple. It requires employers to include the compensation or compensation range for any job, promotion, or transfer opportunity in the job posting (even those that are strictly internal) and also requires that postings include a job description if one exists. Like most laws aimed at pay equity, this also applies when third parties advertise your positions or speak to candidates on your behalf.
What About Positions Outside of New York?
The compensation and job description posting requirements apply to jobs that will be physically performed in New York (even in part) as well as to positions that are performed outside of New York but report to a supervisor, office, or other worksite in New York.
If you’re willing to hire someone in the state of New York, say for a remote position, it’s safest to include the pay range and job description in the posting. While the New York Department of Labor hasn’t written rules to spell out compliance details like this yet, needing to post for jobs that could be done in the state has been a common theme in the rules written by other states with similar laws.
How Specific Do We Have to Be?
The compensation range must include a minimum and maximum annual salary or hourly rate and must be provided in good faith, meaning it should be a reasonable estimation of what that particular open position will pay when filled.
As an example, you might pay your administrative assistants anywhere from $35,000 – $150,000 depending on their level of experience and responsibility. If you know you’re looking to fill the currently open administrative assistant position with someone less experienced (and therefore less expensive), you should advertise the range you believe you’ll actually hire in, e.g., $35,000 – $50,000, rather than advertising $35,000 – $150,000. Aside from the fact that this is required for legal compliance, it will benefit you by preventing people from applying who ultimately wouldn’t accept your offer.
If a position is paid on commission only, an employer can comply by stating in the job posting that compensation will be based on commission.
Broader Implications
The intent of the requirement to post pay ranges in job postings is to promote pay equity and to help close the wage gap for those who are disadvantaged in the job market through no fault of their own. While the approach may feel drastic, it’s been used successfully in the public sector for many years. After the initial rough patch (which may require a fair bit of work from employers who lack documentation around their pay structure), these pay transparency requirements are likely to streamline hiring, compensation, and talent development processes and make your business run more efficiently.
What to Expect
You should anticipate that employees will see your job ads and react to the pay scales provided there. If the ranges you post in ads seem too wide, employees may think you’re trying to skirt the law. This will breed distrust and could potentially lead to employees reporting you. Or they may wonder who among them makes that little or that much, and why. If the ranges are reasonable but you have current employees in that job type who are paid below the low end of the advertised range, that will likely lead to some immediate feedback from those individuals. You’ll want to be prepared to offer raises or very good explanations.
In many cases, employees will also begin discussing this new-found information with their coworkers. Discussing wages is protected by both federal and New York law, so employers shouldn’t attempt to stop or prevent these conversations or punish employees for having them. The result of this sharing may be that employees discover one-off or systemic pay inequality, in which case you may have issues with morale, turnover, union organizing, or lawsuits. Even if your pay choices are perfectly logical across the board, employees won’t necessarily understand why they are paid less than a coworker who they consider their equal, and you should be prepared to explain those discrepancies.
If You Haven’t Yet – Prepare for Liftoff
New York City has had a similar ordinance in effect since last November (minus the job description aspect), which has likely inspired or required many New York employers to adjust their practices by now. If you haven’t done so, prepare to start including compensation information and job descriptions in job postings by September 17.
This question originally appeared on Quora – the place to gain and share knowledge, empowering people to learn from others and better understand the world.
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