As more employers across the country allow remote work, a New York law could force out-of-town companies to be more transparent about pay rates.
New York City joined other jurisdictions like California, Colorado and Washington in requiring employers to include salary ranges in all job postings. The city law went into effect on November 1. The New York state legislature also passed a wage transparency bill, but it has not yet been signed into law by Gov. Kathy Hochul.
New pay transparency laws across the country aim to accelerate efforts to close gender and racial pay gaps, according to Lynne Anderson, an attorney at Faegre Drinker in Florham Park, NJ. “It’s starting to become more of a movement,” she said.
Impact on remote jobs
To fill remote positions, employers outside of New York City must comply with city law if a New York City resident could accept the position.
“A strict interpretation of the statute suggests that the statute applies where there is a possibility that some or all of the work may be performed in New York City, even if remote. Therefore, an employer must carefully evaluate the possibility of hiring a New York City-based teleworker,” said Jason Habinsky, an attorney at Haynes Boone in New York City. “When hiring a New Yorker is unlikely [because a local presence is needed elsewhere]an employer could take the position that compliance is not assured.”
“Employers who do not already have employees in New York City need to be aware that employing a hybrid or remote worker in New York City could expose them to the law and require their compliance with wage disclosure requirements said Alexandra Barnett, an attorney at Alston & Bird in Atlanta.
With hybrid jobs, it can be difficult for employers to determine how much of the work could be performed in New York City. “At this time, it’s not entirely clear how much work will need to be done in New York City for the position to be at least partially based in New York City,” Barnett said. “However, with the proliferation of remote and hybrid work, there certainly is the potential for a New York City resident to apply for and fill a remote or hybrid position, which requires an employer covered by the law to pay their salary and compliance with wage disclosure requirements.”
There may be some leniency for first-time offenders. “During this initial phase, we expect the New York Human Rights Commission to be particularly active in ensuring that employers have made the necessary updates to job postings,” Habinsky said. “However, the Commission has proposed that it will give employers who break the law a strike and 30 days to heal a first violation.”
Further violations have harsher consequences. “An employer may be required to pay a penalty of up to $250,000 for an uncured violation and all subsequent violations. Individuals can also bring a private lawsuit against an employer in court,” Habinsky noted.
There are also wage transparency measures at federal level. In 2021, President Joe Biden issued an executive order prohibiting federal agencies from obtaining or relying on an applicant’s salary history during the hiring process to determine pay. The Office of Human Resources recently announced that it awaits the issuance of a proposed regulation that addresses the use of past salary histories in the hiring and salary determination process for federal employees.
“The Biden administration has made it very clear that pay transparency and pay equity are priorities,” Anderson said. She predicted that the federal government would require more reporting of payroll data.
Not only applicants and new hires are influenced by wage transparency and wage equity. It’s likely that your current employees will notice the salary ranges in job ads and compare them to their own salary. HR reps need to explain the factors that determine an employee’s pay, such as experience, skills and benchmarking in the marketplace.
“When your incumbents see this job and say, ‘I’ve been doing this job here for 10 years and I’m at the bottom end of this job,'” Anderson said, they’re likely to ask for a raise.