24

October, 2022

Mandated Pay Transparency – the Public Posting of Salaries Being Offered – Is Imminent in NYC and CA

At the onset of the pandemic, when businesses were being shut down, new government edicts were materializing by the hour and it felt like the world had turned on its head, I heard from a great many clients, each trying in their own way to sort through the confusion. There was a level of chaos then that I hope never again to experience at quite that level in my professional career.

But I have advised and managed through other inflection points – times at which a jurisdiction (most typically NYC, thank you to my home stomping grounds) has rolled out a substantial change in employment laws that, while covered in advance by lots of law firms and journalists, still caught many employers by surprise. The advent of paid sick leave did that – with rules and guidance issued by the city literally at the eleventh hour before the effective date and employers that already had some form of paid sick leave benefit scratching their heads to discern how what they offered met (or more often did not meet) all that the new law required. And years before that it was the laws prohibiting smoking in the workplace – something that has now become a fairly standard workplace norm was radically shocking when it rolled out, with exceptions for private enclosed office spaces, signage mandates and a plethora of legislative compromises.

We are again at one of those inflection points, and this time the target is employer’s hiring practices. Next week New York City employers will face round one of the change, as November 1 brings with it a mandate that every job posting for a position that could be filled in the city (including by a remote worker) must specify the wage or job range for the position. That mandate takes effect in Westchester County on November 6 and for the entire state of California on January 1.

January 1 also will bring round two to New York City – a requirement that the myriad tools employers may now be deploying for their hiring practices undergo anti-bias testing and that those results, plus a plethora of other information, be made public on employers’ websites and through various notice requirements to job applicants. These requirements will cover the most basic of AI tools, like those that perform key word searches to help filter through (and reject) stacks of job applicants, to far more sophisticated systems that rate candidates’ suitability relative to designated hiring criteria or even conduct and analyze video interviews of prospective applicants.

One client recently commented that this is the full job security for recruiters law, and at least in the short-term it may be. New York City seems to place far greater faith in the unbiased (or at least more modestly scaled) feedback of recruiters and hiring managers than it does in technology that can be programmed to whittle applicant pools down to the choicest of candidates in the blink of an eye.

I have been writing and speaking of these legal changes for months and want to call out some of the resources you can reference for additional information.

  • For background on the basic elements of the pay transparency laws, see page 1 of Takeaways from Summer 2022. For similar background on the AI law, see page 5 of Takeaways from Winter 2021/22. And for the Westchester County piece of this, see my most recent posting on the WHRMA blog.
  • More in-depth articles that we have posted on each of these subjects for the Levy Employment Law blog include: NYC pay transparency law, NYC pay transparency guidance, AI tools, and pending NYS pay transparency legislation.
  • For some of the collateral consequences employers should be anticipating from pay transparency, see my Forbes interview with award-winning executive coach and author Dr. Ruth Gotian, and my more recent interview for the Employment Law column of SHRM, the Society for Human Resource Management.
  • For the broader context of how pay transparency aligns with the 50-year history of pay equity initiatives in the U.S., our firm delivered a continuing legal education program with the Federal Bar Association and MyLawCLE that can be accessed here.

And there are more articles to come, as we help our clients work through the practical applications and implications of these laws. I have been thinking through a range of options employers may wish to consider for their own organizations that get ahead of the pay transparency issue. Yes, a pay equity audit is a good start – as so many legal practitioners have been advising – because the first step in solving a problem is knowing whether one exists. But options and opportunities go well beyond that initial step.

Also, there is the nagging question of whether any of this new legislation actually is addressing the right problem. There is reason to believe it is not, but also options (albeit challenging ones) for how to truly get to the thorny underlying issues. Keep checking with me as we explore those ideas, and please consult employment counsel if you have any questions about how the new hiring laws apply to your organization.

By Tracey I. Levy

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16

June, 2022

Beyond Job Postings, New York State Pay Transparency Laws Would Create a Foundation for Massive Employee Pay Data and Pay History Collection

Two bills passed by both houses of the New York State legislature and currently awaiting submission to the governor for signature add a new, and significant, dimension to the range of pay transparency laws that are proliferating around the country.  Starting from the most public version of pay transparency requirements in the context of individual job postings, these laws impose substantial data retention and reporting requirements that may have widespread implications for future assessment of the equitableness of employers’ pay practices.

Pay Transparency in Job Postings

The first pending New York State law follows the model of New York City and Colorado in that it will require employers to disclose in their job postings the proposed wage or range of wages that would be paid for an advertised job, promotion or transfer opportunity.  The law will prohibit employers from refusing to interview, hire, promote, employ, or otherwise retaliate against an applicant or employee for that individual’s exercise of rights under the pay transparency law.

Where the law is more expansive than others is in two respects.  First, it additionally requires employers to include the job description in their posting or advertisement, if a description exists.  Second, and building on that requirement, the law expressly requires employers to retain:

  • a history of the compensation ranges for each job, promotion or transfer opportunity; and
  • the job descriptions for those positions.

While the pay transparency law will not require employers to report or otherwise collectively disclose that compensation history, another law passed by the state legislature and pending the governor’s signature will, if adopted, expand employee compensation reporting requirements for employers.

Equal Pay Disclosures – State Contractors

Described as relating to equal pay disclosure for state contractors, this second pending law will require contractors to submit reports that include a summary of their “workforce pay averages” (a term not defined by the legislation), which are to be calculated by job category, gender, race and ethnicity, and also report the percentage difference between pay averages in each category.  Businesses with 100 or fewer employees would be exempt from the pay disclosure reporting requirement.

The pending law makes clear that it does not mean to impose a mere paperwork exercise.  Rather, various state government leaders are to receive annual reports related to the information gleaned from the reports.  All the reports are required to be available to the public for inspection and copying, redacting only individual employee names and social security numbers that may have been included.  Further, all government agencies that have retained government contractors are required, “where practicable, feasible and appropriate,” to assess the equal pay practices of contractors submitting bids or proposals to be awarded a state contract.

Implications if New York State’s Pay Transparency Initiatives Become Law

There are substantial, and valid, considerations motivating this drive toward greater wage transparency, as we have discussed in past blog articles and in an interview I did with Dr. Ruth Gotian for Forbes.com.  And there also is reason to question whether these laws will actually achieve their intended objective of wage parity.  Will arming applicants and employees with more information be sufficient to overcome differences in negotiating style (that often correlate with gender and racial differences, whether that be attributable to natural proclivities, defensive techniques developed in response to unconscious bias, or other factors)?

If signed into law, these new legislative requirements pull employers into the center of a massive experiment.  Historical data that employers are required to gather and retain provides a ready source of new information that plaintiffs’ lawyers can likely obtain through discovery and utilize in support of legal claims.  And it is not a far leap to anticipate subsequent legislation that requires employers to publicly report, publish or analyze the data that they will soon be required to collect and retain.  The proposed equal pay disclosure law for state contractors already exemplifies that approach.

Pay transparency laws, particularly in a state like New York where employees have a protected right to discuss salary information with one another, will invite probing questions from existing employees who suddenly learn they are far lower on the pay scale than they had realized.  Already HR colleagues have reported that they are fielding these types of inquiries as to rationale and pressure to boost pay for certain employees.  Employers that have not holistically evaluated their compensation philosophy, methodology and baseline data, and those employers that do not currently have well-defined roles that align with detailed job descriptions and salary bands, may face serious employee relations issues, or worse, under pay transparency mandates.

In New York State, the earliest any of these laws will take effect is November 1, 2022.  Perhaps a pay audit and equity analysis as a summer project?

By Tracey I. Levy

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