job postings Archives - Levy Employment Law

10

February, 2023

Pay Transparency Laws Can Help Workers, But Not in the Way Advertised

Led by the rationale proffered by legislatures in support of pay transparency laws, I have been thinking about them from the wrong perspective. Promoted as a means of closing the gender wage gap, I have been vocal in my criticisms that the laws will be of little or no effect for two key reasons. First, because they do not get to the root problems that produce most of the pay gap, as I discussed in this blog article. Second, because even where they provide useful information for negotiations, they do not overcome the tendency of certain groups to “undersell” themselves.

Reflection on their efficacy is important, because the laws are proliferating and the existing versions are already being tweaked. Less than three months after it took effect, New York City is considering amending its pay transparency law, partly to align with the New York State version of the law, and partly to capture forms of compensation beyond base salary. The city’s proposed amendments to the law will not do anything to address its deficiencies in resolving the gender pay gap.

Connecticut, on the other hand, currently has an earlier version of pay transparency, which requires employers to disclose salary ranges to job applicants during the hiring process. The state is considering amending the law to align with the approach in New York, California, and Colorado, and require that salary ranges appear in job postings. That is a distinction with a difference. Not so much for the gender pay gap problem, but relative to the new way in which I am considering the benefits of pay transparency.

Reconsider Pay Transparency as Serving a Different Beneficial Purpose

How are pay transparency laws helpful to U.S. workers? Sometimes you need to consider things from a different perspective. The aha moment for me was in the epilogue of Barbara Ehrenreich’s book, Nickel and Dimed, which I recently had the opportunity to read. Reflecting on her own experience as a journalist undercover, temporarily occupying the space of a low-wage worker, Ehrenreich observed that her coworkers in those positions had little opportunity to comparison shop for higher-paying positions.

Time is money, transportation is money, and when you have little or no money saved, you cannot afford to hop between multiple employers and interview processes. You only go to as many places as it takes to land a job, even if it is not the best job.

We Don’t Talk Much About Money

Friends and family may provide few insights into other work opportunities because, at all levels of society, most people tend not to say how much they are paid. This was illustrated last month, when The New York Times ran a Sunday feature on people’s compensation, “27 People on the Streets of New York Talk About How Much They Make.” They reported that most of the people they stopped on the streets (nearly 400 were asked) declined to speak with them on the record about how much they earned.

Similarly, from the employer’s perspective, I suspect my own approach is similar to that of most small business owners. Even this past year when I knew pay transparency laws were on the horizon I did not list pay in my job postings. In my interviews with candidates, pay is usually one of the last points covered, and only if I am asked. But why is that? I have done benchmarking and believe I am paying on the higher end for the roles I am filling. And yet I have historically hidden that fact. I could say I wanted people to work for me because they were interested in the work and not the money. While true, I am not sure that was my motive. Rather, I think I am just reticent to talk about pay, worried that my benchmarking is wrong, or that I am planning to offer too much and should pay less. I hedge as long as I can before committing to compensation to reassure myself that I am not overpaying the person or, if I am, that it is because they are a great candidate and worth the investment.

Comparison Shopping Is a Valuable Benefit

Overcoming that reticence and secrecy to allow for “comparison shopping” is how pay transparency laws can make a difference for workers. Imagine if every help wanted ad in the paper or online included a wage range. Employers would be disinclined to inflate that number, lest too many of their current employees start to question their pay, and they would not want to lowball it too much, lest they lose out on attracting the best candidates.

How valuable would it be for people who are barely getting by financially to have salary information for dozens of open jobs at their fingertips? They could quickly pinpoint the highest paying opportunities and prioritize applying for those. Would that equalize pay between men and women, or between individuals of different races? I am not sure that it would for the various reasons I have covered in prior articles. But it sure might help those at the bottom rungs of the pay scale do just a little bit better. Over time those incremental differences can mean the difference between paying for food, shelter, clothing and transportation, versus having to forego one or more basic necessities.

For low wage workers, then, there is a benefit to pay transparency laws. And for any worker the laws force disclosure of data that allows for some degree of benchmarking and comparative analysis, which can help inform wage negotiations. But at more skilled, higher-level positions, the compensation range for posted positions tends to get wider, so the comparative data is less helpful.

New York City’s Newest Contemplated Changes Will Not Help

Currently, New York City only requires employers to disclose base salary, not incentive compensation or commissions. The City Council is considering amendments to the law that would require inclusion of the job description, which would make the law consistent with New York State’s pay transparency law that takes effect in September 2023. The amendments would also require employers to describe the non-salary or non-wage compensation for the position, including bonuses, benefits, stocks, bonds, options and equity or ownership. All that additional data will make for a mighty long (and pricey) job posting for employers, and in my experience those non-wage factors can encompass so many variables that the information employers include in their postings in response to such a mandate will be of little value to applicants.

Rather than bog down employers with further mandates and clutter their job postings to such a degree that the most useful information gets lost in the fine print, local and state governments would be better served in recognizing the value of mandating pay transparency in job postings simply as to base salary. For those who lack the time and resources to interview widely or otherwise collect comparative pay data, it could be invaluable. As for solving the gender pay gap, move past the quick fix window-dressing of pay transparency. Instead, consider the societal changes needed to really make a difference.

By Tracey I. Levy

4

April, 2022

NYC Wage Transparency Law Has Its Limits Under NYC Guidance

By Tracey I. Levy

New guidance issued by the New York City Commission of Human Rights expounds on both the breadth, and the limitations, of the city’s new wage transparency law. The law, which we discussed in our prior blog article, requires employers posting for a position in New York City to state in their job posting the minimum and maximum salary for the position. This requirement is currently scheduled to take effect May 15, 2022, but there is a pending legislative proposal under consideration in the City Council to delay the effective date.

Update: a May 12, 2022 amendment to the law delays the effective date to November 1.

Breadth in Applicability

The wage transparency law covers employers with four or more employees or one domestic worker. When counting “employees,” business owners, employees, interns and independent contractors must all be considered, as long as at least one of them works in New York City. Employment agencies are also covered. There is an exception for temp firms seeking applicants to join their pool of available workers, but the law provides that the employers who work with those temp firms must follow the new wage transparency law.

The law also extends to every form of advertisement or job posting – whether internal or external, printed or electronic, published or circulated. And it covers any type of job – whether a new position, a promotion or a transfer. Employers need not advertise for a position in order to hire, but if they do post or advertise in any way then the guidance states that they must comply with the law.

Limitations in Wage Information to Be Disclosed

Significantly, though, the wage transparency law is about disclosure of base pay only. Whether defined as an hourly wage or a fixed salary, that dollar value must be disclosed. The guidance makes clear that employers are not required to disclose, for example, either in specific or general terms, any bonuses, commissions, tips, stock, overtime pay, or other forms of compensation that may apply to the position. Compensation structures that will thereby experience little impact from the new law include:

sales jobs paying largely on a commission basis;
mid-level and higher positions in industries such as financial services for which the bulk of compensation is in the form of discretionary bonuses; and
positions at tech firms and other start-ups that offer stock option awards as a significant component of their overall compensation plan.

New York City’s new law also does not require disclosure of wage supplements, such as paid time off, or benefits, including insurance or pension plan contributions. In this regard the law differs from its closest counterpart in Colorado, where employers are required to include in their job postings a general description of any bonuses and the nature of benefits provided.

The law further has its limitations – and the guidance is not particularly helpful – in regard to the wage range to be posted. Where the pay is fixed, perhaps at or slightly above minimum wage, meeting this requirement is as simple as posting “$15 per hour.” Where there is more flexibility or variability, depending on factors such as the candidate’s prior skills and experience or meeting the candidate’s stated salary expectations, New York City employers are directed to post a wage range based on the employer’s honest belief as of the time of the job posting as to the range of pay it would offer to a successful applicant.

States with similar wage transparency laws, most notably neighboring Connecticut, have defined benchmarks for employers to use in defining the wage range. These may be an applicable pay scale, the amount budgeted for the position, or the actual range of wages for those employees currently holding comparable positions. The New York City law, and this new guidance, are both silent on that point. Nothing in the law or the guidance states that an employer cannot hire someone at a wage that is above or below the posted range, but there also is nothing in the law or guidance that assures an employer it can make those hiring decisions.

Employers that hire, transfer or promote candidates into roles at wage rates that fall outside the posted range must therefore be prepared to demonstrate the bona fides of their original wage range estimate, as reflected in the job posting. These employers also should be prepared to explain why/how the wage they ultimately agreed to pay was not foreseeable at the time of the job posting.

30

January, 2022

Persistent Pay Inequity Drives Legal Mandates for Employers to Publicly Post Wages Being Offered

By Tracey I. Levy and Alexandra Lapes

Five or six years ago, in speaking with a start-up client about social media policies and wage transparency, the client explained they made available to all on their intranet a spreadsheet with salary information for the company’s entire management team. While that practice remains extraordinary even in 2022, a new report from The Conference Board and Emsi Burning Glass highlights a growing trend toward greater wage transparency. Among the key findings from Emsi Burning Glass’s analysis of job openings reportedly posted on nearly 40,000 separate sources, including job portals and employers’ career sites, was that:

more than 12 percent of all such postings in fall 2021 included salary data; and
nearly 16 percent of all noncollege occupations in fall 2021 included salary data.

That is about a 65 percent increase in wage transparency in just 2 ½ years – since April 2019.

The Conference Board/Emsi Burning Glass report attributes much of the increase to the current competitive labor market, where wage transparency is just one of numerous proactive steps that organizations are taking to attract applicants. State and local legislatures – notably including New York City and Connecticut – will be further fueling that trend, as new laws take effect that require wage range disclosures in the hiring process.

Pre-Existing Landscape of Wage Transparency Laws

The earliest of these laws date back to California in 2018. The California version, as well as those passed in the subsequent two years in Washington, Maryland, and Toledo and Cincinnati, Ohio, require an employer to disclose the wage range for a position upon the applicant’s request. Colorado took transparency to a new level in 2021, and it requires private employers to affirmatively state the wage rate or range with any job posting for a position to be performed in Colorado or remotely from another location. Connecticut and New York City have taken Colorado’s lead, with new wage transparency laws passed just in the last seven months.

Disclosing Wage Range for Connecticut Job Postings

Effective as of October 1, 2021, Connecticut employers must provide job applicants with the wage range for the position to which the applicant is applying, even if the applicant does not inquire. The law states that this information must be disclosed either when requested or, if no request is made, then no later than the time a job offer is made. Connecticut further requires employers to provide this type of wage range information to current employees:

who change positions with the employer; or
at an employee’s first request.

The “wage range” to be disclosed is defined as the range of wages an employer anticipates relying on when setting wages for a position, and may include reference to:

any applicable pay scale;
a previously determined range of wages for the position;
the actual range of wages for those employees currently holding comparable positions; or
the employer’s budgeted amount for the position.

Notably, recent guidance issued by the Connecticut Labor Department clarified that the law extends to anyone who applies for a job with a Connecticut employer, even if the employee is working remotely from another state.

NYC Requires Similar Disclosure, with Less Guidance

Beginning May 14, 2022, New York City employers with at least four employees (inclusive of contractors and employed family members), may not post job listings without stating the minimum and maximum salary for the position. Failing to include this wage range information is deemed an unlawful discriminatory practice, and the requirement extends beyond job advertisements to posted promotion and transfer opportunities. The law states only that the wage range may include the lowest to the highest salary the employer believes in good faith at the time of the posting it would pay for the advertised job, promotion or transfer opportunity. We anticipate that, closer to the effective date, the city will provide additional guidance regarding the appropriate measure of the wage range.

A Growing Trend

Nevada and Rhode Island have similarly passed wage transparency laws in the past year. Both states have staked a middle ground on when such information must be disclosed, but each prioritizes a different group. Nevada requires that wage range information be automatically provided to each job applicant who is interviewed, but only given to employees if they request the information in the context of a promotion or transfer. Rhode Island requires that wage range information be given to job applicants if they request it and prior to discussing compensation, but requires that employees automatically be provided the wage range at time of hire, when the employee moves into a new position, and whenever the employee requests it.

Similar legislation is currently making its way through the committee review process in New York State. As currently drafted it would mandate disclosure of the wage range both for the internal or external posting of each job opportunity, and upon an employee’s request. A bill pending in Massachusetts would take the more modest approach of requiring disclosure only upon the applicant’s or employee’s request. While we are not currently aware of any similar bills pending in New Jersey, the state has taken strong legislative action in the past several years to mandate pay equity, and we anticipate that a wage transparency bill may be forthcoming.

Reconciling Theory and Reality

The desire to counter pay inequity, which persists particularly for women, people of color, and those at the intersectionality of those two characteristics, drives this legislative mandate of wage range transparency, as stated in the preamble to many of these new laws. The theory is that equipping workers with greater information will enable them to better negotiate their pay.

A recent article in Money magazine calls that theory into question, citing the experience of Buffer, a tech start-up. Not unlike our client from five years ago (which was not Buffer), Buffer had gained some notoriety for publishing a public spreadsheet, beginning back in 2013, that included the salaries for its entire workforce. According to the article, the company later began analyzing its pay practices and found a gender pay gap of 15 percent in 2019. This is just slightly better than the 18 percent pay gap reported by the Bureau of Labor Statistics both in 2019 and 2020. The article continues by noting that it was only through additional, affirmative measures taken by the company that Buffer said it was able to reduce the pay gap to 5.5 percent in 2021 – pay transparency alone, even over multiple years, had not made a difference.

Where that Leaves Employers in the Tri-State Area

Currently, employers in Connecticut have an existing obligation under the recent wage transparency law to update their job posting practices and include wage range information. New York City employers must prepare for the May 14, 2022 effective date of the city’s pay transparency requirement. Employers in the rest of New York State and in New Jersey should anticipate that they likely are just a few years away from having to meet similar requirements.

Moving beyond mere legal compliance, employers that are committed to pay equity should take a fresh look at their pay practices. In the past, being a better negotiator or coming in with a higher base from a prior job were accepted explanations for differences in compensation among otherwise equally qualified employees with different protected characteristics. The impetus behind the newest pay transparency laws suggests that there is less legislative acceptance of that explanation. Consistent with the Emsi Burning Glass report, in this time of the “great resignation” and a ready flight of talent seeking better opportunities, employers may want to consider a different analysis and approach to their pay practices.