A new law in New York will require employers and hiring managers to include salary ranges in all job postings and advertisements.
The law, which was passed on January 15, is expected to come into force on May 15 and will apply to all employers with four or more employees. The purpose of the regulations is to encourage pay transparency and reduce the gender pay gap by requiring employers to state the minimum and maximum wage they would pay for each new position or internal transfer.
Proponents of the law say it could help attract employees who want a clear range of what to expect in terms of payment and could encourage people to ask for more than they usually would. However, the new regulations could also provoke a backlash among employers and encourage them to sue remote workers living outside New York for their positions to avoid compliance with the rule.
According to Mark Goldstein, labor and employment attorney at Reed Smith LLP, “there was a significant backlash” when Colorado passed a similar pay transparency law last year. To avoid having to join, some Colorado employers have started advertising remote workers with job postings telling Colorado residents not to apply.
“It remains to be seen if we’ll see a similar reaction here hiring New York-based workers,” Goldstein told FN in an interview.
As things stand, it is still largely unclear how this new law will be implemented. For example, it’s unclear whether the law would apply only to salaried workers or whether it would also include hourly employees, who make up a large portion of retail jobs in New York City.
The announcement of the law also comes amid a record resignation period, as employers across multiple sectors struggle to fill hundreds of vacancies. Nearly 4.3 million people left their jobs in December at a rate of 2.9%. Soaring quit rates have exacerbated labor shortages. In retail, this makes it difficult to retain store staff.
“I could definitely see [the new law] potentially having a chilling effect on hiring individuals in New York City rather than achieving whatever its stated goal, especially with the labor shortage, the Great Resignation,” Goldstein said.
For businesses that require in-person work — such as retail and manufacturing jobs — employers won’t be able to use remote workers. In this case, employers would have to deal with implementing salary scales for each role, which is likely to be a tedious task.
The new rule has already drawn opposition and criticism from other business groups in New York. The Partnership for New York City, which has members including JPMorgan Chase & Co. and International Business Machines Corp., told the Wall Street Journal they are against the law.
“It’s just not the right solution,” Partnership for New York CEO Kathryn Wylde told the Journal, explaining how the law imposes burdensome regulations on employers. “He should never have been allowed through.”
Ed Egee, vice president of government relations and workforce development for the National Retail Federation, also noted the potential problems with passing this type of regulation.
“Employers across all sectors, including retailers, are making salary offers to new hires based on a variety of factors,” Egee said in a statement to FN. “These state and local mandates hinder both employee flexibility and the employer’s ability to consider a broad [range] candidates for a given position.
