To promote pay transparency and equity, an increasing number of states and localities are requiring employers to disclose salary data in job advertisements or postings. The trend started in Colorado in 2021, and now a number of other jurisdictions have followed suit, including New York City and the states of California and Washington. The New York City law took effect on November 1, 2022, and the California and Washington laws go into effect on January 1, 2023. Similar laws have recently been enacted in other areas as well, including Jersey City, New Jersey (effective June 15, 2022), the City of Ithaca, New York (effective September 1, 2022), and Westchester County, New York (effective November 6, 2022).
This post will provide an overview of the New York City, California, and Washington laws, and discuss steps that employers can take to comply with the new requirements.
New York City
Effective November 1, 2022, amendments to the New York City Human Rights Law (the “NYCHRL”) require employers with four or more employees (at least one of whom works in New York City), to include salary ranges in job advertisements. (Local Law 32 of 2022 (as revised on April 28, 2022).) The law covers advertisements for a job, promotion, or transfer opportunity that can or will be performed in whole or in part in New York City, whether from the office, in the field, or remotely from the employee’s home, as well as job advertisements for work to be performed by independent contractors, interns, domestic workers, or any other category of worker protected by the NYCHRL. Advertisements are covered regardless of how they are distributed—whether, for example, on internal bulletin boards, internet advertisements, printed flyers distributed at job fairs, or in the newspaper.
The law does not apply to positions that cannot or will not be performed in New York City, nor to temporary help firms seeking applicants to join their pool of available workers.
Job advertisements must state the minimum and maximum salary that the employer in good faith believes at the time of posting it is willing to pay for the advertised job, promotion, or transfer opportunity. “Good faith” means the salary range that the employer honestly believes it is willing to pay the successful applicant(s) at the time the employer is listing the job advertisement. “Salary” includes the base annual or hourly wage or rate of pay, regardless of how frequently payments will be made. “Salary” does not include other forms of compensation or benefits offered for the position.
Employers that violate the NYCHRL can be ordered to pay monetary damages to affected employees and engage in other forms of affirmative relief, such as amending advertisements, creating or updating policies, conducting training, and providing notices of rights to employees or applicants. Employers can also be assessed civil penalties of up to $250,000 for a first violation that remains uncured (within 30 days of receiving the notice of violation), and for subsequent violation(s).
The New York City Commission on Human Rights has published guidance on the new law. Also, the New York State legislature has passed a similar statewide compensation disclosure bill, Senate Bill S9427, which will next be sent to Governor Kathy Hochul for signature.
Effective January 1, 2023, employers in California will be required to comply with new pay transparency measures pursuant to Senate Bill 1162. Here is an overview of each of the provisions:
- Pay Scale Disclosures in Job Postings. Existing California law requires employers to provide the pay scale for a position upon request to an applicant. Under the new law, employers with 15 or more employees will now be required to include the pay scale for a position in any job posting, whether external or internal. Also, if the employer uses a third party to announce, post, or publish a job posting, the employer will be required to provide the pay scale to the third party to include in the job posting. “Pay scale” is the salary or hourly wage range that the employer reasonably expects to pay for the position.
- Pay Scale Disclosure for Current Employees. The new law will require employers to, upon request, provide an employee the pay scale for the position in which the employee is currently employed.
- Records Retention. Employers will be required to maintain records regarding job title and wage rate history for each employee, for the duration of employment plus three years. The records will be open to inspection by the Labor Commissioner and could be used to allow the Labor Commissioner to determine if there is a pattern of wage discrepancy. Failure to maintain these records will create a rebuttable presumption in favor of an employee’s claim that the employee has been aggrieved by a violation of the pay scale disclosure requirement.
- Annual Pay Data Report. The new law also amends California’s existing pay data reporting requirements that apply to private employers of 100 or more employees. Previously, covered employers could satisfy the California reporting requirement by submitting a copy of the employer’s federal EEO-1 report to the California Civil Rights Department (formerly known as the Department of Fair Employment and Housing) (the “Department”). Now, private employers of 100 or more employees, including private employers of 100 or more employees hired through labor contractors, will be required to submit an annual pay data report to the Department on or before the second Wednesday of May 2023, and annually thereafter on the second Wednesday of May, and can no longer satisfy the reporting requirement simply by submitting their EEO-1. The new law expands the categories of information that must be reported to include the median and mean hourly rate by race, ethnicity, and sex within each job category. Also, employers with multiple establishments need only provide a report covering each establishment rather than a consolidated report.
- Remedies. Individuals who claim to be aggrieved by violations of the job posting disclosure requirements may bring a civil action for injunctive and any other appropriate relief, and the Labor Commissioner can order an employer to pay civil penalties of $100 to $10,000 per violation. Also, employers that violate the pay data reporting requirements may be assessed civil penalties of up to $200 per employee.
Beginning January 1, 2023, Washington state employers with 15 or more employees will be required to affirmatively disclose wage or salary range to applicants and employees, pursuant to new provisions to the state’s Equal Pay and Opportunities Act, RCW 49.58.110. Employers must include in postings for each job opening the wage scale or salary range, and a general description of all benefits and other compensation to be offered to the hired applicant. A “posting” is any solicitation that is intended to recruit job applicants for a specific available position, including when the recruitment is conducted directly by the employer or indirectly through a third party. Further, the employer is required to provide the wage scale or salary range upon the request of an employee offered an internal transfer to a new position or promotion.
For violations, a job applicant or an employee may bring a civil action and recover actual damages, statutory damages equal to the actual damages or $5000 (whichever is greater), plus interest, costs, and reasonable attorneys’ fees. Employers may also be subject to civil penalties.
Employers who are impacted by the new salary transparency laws should consider the following measures:
- Ensure that all employees who are involved in the hiring process are made aware of the new salary disclosure requirements.
- Designate a point person or department to review job postings to ensure compliance with salary disclosure laws, and ensure that there are processes in place to respond to employee requests for salary ranges.
- Confirm that recruiters, vendors, and other third parties that distribute job postings on behalf of the employer are prepared to comply with the new salary disclosure requirements, and ensure they have the required information for postings.
- Develop salary ranges for roles in advance of job postings, instead of leaving salary decisions to one decision-maker on an ad hoc basis, and document the basis for the salary range determinations.
- Consider proactively conducting a pay equity audit to ensure that there are no discrepancies in pay that could be attributed to gender, race, or other protected characteristics.