September 23, 2023

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The Pay Transparency Law goes into effect in New York State on Sunday

The Pay Transparency Law goes into effect in New York State on Sunday

Starting Sunday, employers across New York State are required to list the salary or salary range for job openings. It’s called the Pay Transparency Act, and it was signed into law by Gov. Kathy Hochul in December 2022.

The goal is to empower job seekers, while addressing wage inequality, advocates said.

Jared Cook, Tully Reinke’s attorney, said the law does two things. It provides more transparency to job advertisements and wages. It requires employers to keep records of all postings, so they can prove they are following the law.

Cook said the new law will help applicants know exactly what they are applying for. It’s also beneficial for employers who pay competitive wages, he said.

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

So what led to Hochul signing this into effect?

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

“This happens all the time,” he said. “Also in many cases, they get the job, negotiate the salary, and find out years later that they’re getting paid less for doing the same job as someone else.”

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

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“If you look across the board and see what we’re paying people for these jobs, you’ll often see unconscious bias that will emerge,” he said. “It would be much easier to know if you’re getting paid less than other people doing the same work, but maybe a different skin color or a different gender.”

However, not everyone wants to jump on board so quickly. In a statement, Kathy Richmond, director of human resources for the Rochester Chamber of Commerce, said it remains to be seen whether the new law will make a difference in pay inequality and discrimination.

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

Employers will have to explain why new employees are paid more than someone who has been working there for several years, Richmond said. Morale is likely to suffer, as employers work to convince employees of their value, regardless of pay rate.

Full statement from the Rochester Chamber of Commerce:

New York State’s pay transparency rules will go into effect on Sunday, September 17. I expect there will be a few employers who have done little to prepare for this. The NYS just published its proposed rules yesterday, so until now, employers have had to review the regulations or law firm articles to learn more. They then had to either figure it out themselves, work with a lawyer to understand the requirements (very expensive), talk to an organization like the Chamber for guidance, or do nothing. With all the HR professionals and others out there already with HR responsibilities, I think many of them wait until they have an opening to figure out what they need to do.

For many years, employers have mostly viewed pay ranges as confidentiality and a competitive advantage. Although of course some employers felt it was important for employees to know why they were paid certain wages. Wage pressure is continually exacerbated by employers having to adhere to New York State’s minimum wage and increasing the salary threshold each year. The annual increases were particularly difficult for nonprofits that were required to pay their employees higher salaries to comply with minimum wage increases, but whose funding did not see corresponding increases.

As the war for talent progressed, and then the emergence of the Corona virus, many employers were forced to offer higher than usual pay rates just to attract employees to their jobs. The gap between long-time employees and new employees was rapidly shrinking and then disappearing. However, both for-profit companies and nonprofits alike have had difficulty making further adjustments to address wage pressure when all they can do is meet minimum wage and salary threshold changes, not to mention ever-increasing benefits costs, rising costs of goods and services, Give it a name.

That brings us to New York State’s pay transparency, which will put some employers in the hot seat once employees see what good faith scopes employers must include in job ads starting September 17. There will be tough questions asked and employers will have to try to explain why new employees are paid more than someone who has been with them for several years. Morale is likely to suffer as a result. The employer will need to work hard to convince these employees that they are truly valued regardless of their pay rate and that the organization will do what it can to make it right, although it may take some time. Employers are simply stuck between a rock and a hard place. And things won’t get easier. The U.S. Department of Labor is now proposing a significant increase in the federal salary limit for exempt employees.

So, whether New York State’s pay transparency will ultimately make a difference to systemic wage inequality and discriminatory wage-setting and hiring practices remains to be seen. But it will certainly start some conversations that will hopefully lead to a better workplace which is good for business.