- As of November 1, a law in New York City now requires employers with four or more people on the payroll to provide a salary pay range in all job advertisements.
- Workers have been increasingly calling for better pay transparency as they demand a more equitable workplace experience, which starts during the application and hiring process.
- Allwork.Space spoke to four HR leaders to get their reaction to the new NYC pay transparency laws.
Workers have been calling for better pay transparency as they demand a more equitable workplace experience, which starts during the application and hiring process.
Some states and cities are listening, and the laws are having ripple effects throughout the U.S.
Last year, Colorado enacted the Equal Pay for Equal Work Act — a law that requires employers to include salary ranges on their job postings.
As of November 1, a law in New York City now requires employers with four or more people on the payroll (where at least one of them works in the city) to provide a salary pay range in all job advertisements.
Starting January 1, 2023, a similar law will go into effect in California for employers with at least 15 employees. Companies will be required to include a salary or hourly wage range, according to CNN Business.
Rollout of the new law has been a little bumpy.
According to the new NYC law, it doesn’t matter where a job is posted, it has to include a salary range. Internal or external sites, flyers, or classified advertisements — they all are now required to include a salary disclosure. The job site Indeed even said it won’t post any NYC-based roles that do not include salary ranges.
The NYC law specifically says that businesses hiring in the city must include a “good faith salary range” for every job posting. This part of the law appears to need some kinks ironed out.
As salary numbers started rolling after the law was put into place, companies have been called out for posting extremely broad ranges: $50,000 to $145,000 for a reporter opening, $125,800 to $211,300 for a senior technical writer, and $106,000 to $241,000 for a general counsel position, according to CNBC.
How will new transparency laws affect the future of work?
Job applicants may no longer have to invest weeks or months in a recruitment process before they’re told what a potential employer would be willing to pay them.
Most likely, workers across the country will begin demanding such laws. If other cities and states pass similar transparency laws, this could create compliance issues for organizations.
Market adjustments to pay can occur quickly, but companies may be stuck once they’ve posted a job. According to Emily Dickens, head of government affairs at the Society for Human Resource Management, an employer could be in violation of the law if the pay scale was changed after the initial job posting is published.
Allwork.Space spoke to four HR leaders to get their reaction to the new NYC pay transparency laws.
Paul Lewis, Chief Customer Officer at Adzuna, told Allwork.Space that he believes the new laws are intended to bring clarity and reduce systematic bias.
Allwork.Space: What’s your opinion on the new NYC pay transparency laws?
Paul Lewis: I believe the new NYC pay transparency laws are a step in the right direction. Our Adzuna data showed only 6% of job postings in NYC included salary in August, so the move to every job posting disclosing a salary range is a huge improvement.
The law means employers will need to post an accurate salary range, from the lowest to the highest salary the employer in good faith believes they could offer for a job at the time of the job posting. I believe we may see some very large salary ranges because of this, but it’s still an improvement from a complete lack of clarity about salary.
It’s great to see NYC is prioritizing equality, and we will see a positive knock-on effect internally at companies. We know that women and ethnic minorities are often underpaid due to systemic bias in the labor market, and businesses openly disclosing salary ranges for job ads may mean employees in these groups could become aware that they’re currently being underpaid — and could arm themselves with more information to ask for a raise, or to make the decision to leave.
If employers have historically had unfair pay practices, they should be prepared for a reckoning.
Allwork.Space: Are these new laws going to impact NYC pay rates because of all the employees looking for remote work?
Paul Lewis: Not necessarily. Employers will likely have weightings for NYC-based roles that involve in-office or hybrid working in NYC vs. remote roles for work that can be done from anywhere.
With the new laws, it becomes more important than ever for employers to disclose if a role is actually available to fully remote workers, or whether it really involves in-office or hybrid working.
Allwork.Space: Will NYC rates become a benchmark?
Paul Lewis: With a complete lack of salary transparency in most other states, there will be jobseekers who look to NYC job ads as examples to give them some indication of what they should be earning.
Employers will likely have weightings for NYC-based roles, so this may lead to inaccurate high expectations and frustration among people looking for work. Companies can overcome this by disclosing their own salary ranges and being transparent about how their pay may change based on the location of the role.
It’s also worth noting that some companies already use location-neutral, standard salary bands as a talent attraction tool. These companies (e.g. Zillow, Hubspot and Reddit) have a flat rate for roles across the US regardless of their location.
However, there are even more companies that have announced location-adjusted salaries (such as Twitter, Microsoft and Facebook). The NYC law is unlikely to influence change on companies that are already using these two very different approaches and salary philosophies.
Dave Carhart, VP of Advisory Services at Lattice, told Allwork.Space that the new NYC law has already begun to make an impact.
Allwork.Space: What’s your opinion on the new NYC pay transparency laws?
Dave Carhart: The NYC pay transparency law is a huge step towards great openness about pay practices. This law has already sent off a ripple effect, starting deeper conversations nationally within both companies and policy circles.
Why? The ongoing shift in the labor market, increasingly distributed workforces, rising inflation, generational shifts, and now legislative changes are driving a significant shift in expectations around compensation transparency from employees.
Lattice’s research found that 65% of employees want more transparency from their companies about pay practices, and over half said that companies should disclose how much everyone at an organization is paid.
Allwork.Space: Will NYC rates become a benchmark?
Dave Carhart: We still expect to see differentials between market pay averages in different locations, and many companies with workforces nationally do differentiate their ranges based on location.
For industries and job types with a high percentage of remote work we are seeing some compression, with other locations increasing to be closer to NYC and SF rates. We’re still early in this transformation, however, and it’s too early to say how that will affect NYC long term.
We’re seeing variety in the specifics of the legislation. For example, the recently passed California law will also require companies to disclose pay ranges to employees when asked.
In a trend towards even more transparency, some may start to post salary bands for non-NYC locations along with the NYC ones.
Pushing back, some other companies are going to test the limits by posting exorbitant ranges or recruiting more through non-public sources.
With pay transparency, if businesses don’t take clear steps to catch up on the trend now, they risk finding themselves permanently behind.
We know a lot of businesses aren’t sharing salary information from our own research: We found that just 25% of employees know the pay band for their job level.
That tells us that somewhere around 75% of HR teams aren’t currently sharing this information; it makes sense then that the biggest concern we’re seeing is around how employees will respond to increased transparency.
Mark DiMassimo, Founder and Creative Chief of DiGo (DiMassimo Goldstein), told Allwork.Space that he believes the new law might make it so NYC businesses outsource talent.
Mark DiMassimo: Ironically, this law is going to have the unintended effect of hurting New York City-based job-seekers. It’s more expensive to live in NYC, and NYC-based jobs have traditionally paid more.
Now NYC-based businesses will be incentivized to decide up front whether a job should go to NYC-based talent or just to the more affordable talent outside of the city.
By advertising rates that undercut the New York City salary expectations, they’ll first exclude NYC-based talent and could even lower the average pay in NYC over time.
Thinking through the behavioral outcomes of decisions — whether regulatory, legislative, or marketing — is essential to creating the best outcomes for all involved. Transparency is good, but the construction of this law makes it potentially bad for NYC residents.
Eric Yaverbaum, CEO of Ericho Communications, told Allwork.Space that pay transparency will help company morale and improve culture.
Eric Yaverbaum: Transparency plays a key role in achieving a healthy, inclusive work environment, and on the whole, a move toward pay transparency is great for everyone — employees and employers alike.
It ensures that employers and prospective employees are on the same page so both can avoid wasted time in the hiring process. It puts employees in a better position to be more fairly compensated, which in turn is better for morale and company culture. Plus, it’s an important step toward pay equity for historically marginalized workers (like women, who still make 84 cents for every dollar a man makes in the U.S.). But like any change, it’s of course going to have its bumps and hurdles.
When Colorado first enacted its Equal Pay for Equal Work act, job postings dropped in the region partly due to companies avoiding the law and targeting remote workers outside of Colorado.
While this caused an initial setback to the law’s goal of addressing pay disparity, it won’t be a lasting one if more states follow suit, which is already happening; California and now New York City have both enacted their own pay transparency laws.
Those two represent a significant chunk of the talent pool, so it would be wise for companies to accept pay transparency laws and adapt to them, rather than waste their energy trying to skirt the rules.
While unlikely in the near future, for larger companies that have to compete for talent, it’s not out of the realm of possibility that salary ranges may eventually rise to something closer to those seen in New York. For now, though, it’s more likely that companies will simply adjust pay rates based on the employee’s location.
At the end of the day, the benefits of New York’s pay transparency laws will largely outweigh the challenges companies will face as they incorporate them. Achieving pay equity is an important endeavor and is well worth the bumps we may face along the way.
The best thing companies can do right now in response to the new law is embrace transparency — don’t try to hide rates, and be honest with current and prospective employees. Refine messaging in job postings and hiring materials, clearly explain why salaries may differ in somewhere like Joplin, Missouri versus NYC.
Or, better yet, offer equitable pay if you can. The key for pay transparency to work is for companies to participate in good faith. Yes, it will pose new challenges for employers as they adapt, yes there will be growing pains, but transparency with our employees is where the future of work is headed. You can either plant your feet and try to fight it, or you can ride with the current and move your company forward.
