What does the pay transparency law mean for New Yorkers?

The new year has brought many new laws that directly affect New York employees and employers. The most recent is a pay transparency law.

This measure could dramatically improve the gender pay gap and empower employees to make informed employment decisions. Below, we take a look at what the pay transparency law means for both employers and employees in New York City.

Pay transparency and employers

The new law requires employers with more than four employees to publish a compensation scale with every job posting, promotion or transfer opportunity.

Employers may need to conduct an internal audit to identify the minimum and maximum salaries for an advertised position. If the role is new, the employer must make a decision based on a good faith belief of what they will pay for it.

While these requirements add to an employer’s already lengthy list of legal obligations, they can help prevent legal disputes regarding wage violations and discrimination.

Pay transparency and employees

Before the passage of this law, employees often knew everything about a job besides its pay. Some employees would research jobs, submit applications, and go through multiple rounds of interviews only to learn that the job pays far less than what the employees were willing to accept.

Further, concealing salary ranges makes it very difficult for individuals to know if they are paid less than someone else performing the same role. This type of disparity primarily impacts female workers and people of color, who historically have been paid less than their white male counterparts.

Starting in May of this year, when the pay transparency law goes into effect, employees will have access to this valuable information to help them identify suitable jobs before deciding whether to apply.

Challenges that may arise

Despite the benefits of this measure, complications can still arise. For example, employers may misrepresent salaries, or there may be confusion over the compensation for a particular job that is listed in different locations around the country.

Further, employers may decide to make their salary assignments formulaic, impacting workers’ options when negotiating compensation or seeking additional pay for exceptionally high performance.

In spite of the challenges that can and will arise surrounding this measure, it could be an incredibly powerful tool that allows employees to make informed decisions when applying for jobs and receive fair compensation if they decide to accept a position.

That said, although this is a positive step for employees, there is no magic bullet to ending wage disputes, which will undoubtedly continue to affect New Yorkers. When they do, seeking legal representation to resolve them is crucial.