NEW YORK >> For years, companies of all sizes have closely guarded the potential pay for their job openings, keeping applicants in the dark about possible compensation and preventing employees from discovering that their colleagues make more than they do.
But that dynamic, which has long benefited corporations in salary negotiations and has been blamed for exacerbating gender and racial pay gaps, will soon end in New York City, one of the largest job markets in the world.
Under a new city law that goes into effect Tuesday, nearly every company will be required to include salary ranges for job postings, both those shared on public sites and on internal bulletin boards, and even for those jobs that offer a hybrid schedule or can be performed fully remote.
Here’s what the law will mean for employers and workers in New York City.
WHAT INFORMATION WILL COMPANIES HAVE TO DIVULGE?
The sweeping New York City rules will apply to almost all companies except for the smallest firms. Any business with at least four workers, assuming at least one of them is based in the city, must include the lowest and highest salaries for any job it posts — a requirement that will force some of the biggest companies in the world with offices in New York City, from Google to Pfizer to Verizon, to divulge pay information.
The salary ranges must be provided in “good faith,” the city says, which means that they must accurately reflect what the company would be ready to give a new employee. The ranges are for base salary, excluding the cost of other benefits like overtime, paid vacation and health insurance.
IS THIS NEW SALARY TRANSPARENCY A REQUIREMENT IN OTHER PARTS OF THE COUNTRY?
The new requirements put New York City among a growing number of places in the United States that require salary transparency from private employers. The trend has taken hold during the pandemic as leverage in the American workplace has increasingly shifted toward workers.
Colorado implemented salary requirements for job openings this year, and California and Washington state will mandate similar rules in 2023. The New York state Senate passed a salary transparency law in June that is similar to the one in New York City, but it has yet to be signed into law by Gov. Kathy Hochul.
In the city, the salary requirements were passed nearly a year ago by the City Council during the last days of the administration of then-Mayor Bill de Blasio. Company executives and business groups were caught off guard, complaining that they were not consulted on the legislation and were unaware of it until just before it was approved.
That criticism led the city to delay the start date to November from May and to make some tweaks, including removing the fine for a first-time offense; subsequent offenses, however, can cost up to $250,000. The new law will be enforced by the city’s Commission on Human Rights.
WILL COMPANIES COMPLY?
Several large companies in the financial and tech industries have already updated their job postings to be in compliance. Some corporations have gone further, such as Citigroup, which added salary information this month to all of its openings in the United States, not just those in New York City, where the bank is one of the city’s largest private employers.
The changes have been reflected in active job openings. At Citigroup, a senior associate at the bank’s New York City offices can earn more than $125,000 annually. A director at American Express will make at least $130,000. And a software engineer at Amazon can earn a salary as high as $213,800.
Earlier this year, the real estate company Zillow, as well as its New York City listings site StreetEasy, started to include salary information on openings in the city, the company said. One recent listing, for a strategic communications manager at StreetEasy, offered a salary of at least $99,300.
A spokesperson at Citigroup said that the bank added salary ranges not just for jobs in New York City but throughout the country as part of a company initiative focused on pay fairness and employee retention.
“This initiative supports our pay equity goals and reinforces many key principles such as being more transparent as an organization and simplifying our processes,” the spokesperson said.
Glenn Grindlinger, an employment lawyer at the firm Fox Rothschild, said that many large corporations may follow the path of Citigroup and add salary ranges on all jobs in the country. Doing so would ensure compliance with New York City law, which also covers remote jobs that could be performed in the city, he said.
But Grindlinger said he was concerned about small- and medium-size companies in the city, especially those outside Manhattan, that may be unaware of the new law, as well as firms in other parts of the country that do not know that their remote jobs, if they can be performed in New York City, will also have to comply.
“It’s a pretty big deal,” Grindlinger said. “And the outreach, it has not been where it is needed, which is in the other boroughs.”
HOW COULD THIS CHANGE AFFECT JOB SEEKERS?
Stephanie Lewin, 39, works as a sales associate at a clothing and home goods store in lower Manhattan and has been looking for a new job. She has noticed an increase in compensation disclosures on Indeed’s online job listings, but some of the salary bands are too far apart to be helpful, she said, like listings that propose a range of $17 to $50 an hour.
But overall, she said the disclosures have been helpful in weeding out jobs for which the upper salary range falls below her expectation of earning at least $25 an hour. “It definitely at least takes away one element of surprise or decision-making upfront,” said Lewin, who has worked in the retail industry for 16 years.
Grindlinger said he believed the new salary ranges would lead applicants to negotiate for a salary at the higher end of the scale. “The economy and inflation has swung the pendulum toward the employee,” he said.
A spokesperson at Indeed said that an increasing number of openings on its site across the country now included possible salaries provided by employers. (The company did not have data for New York City-based jobs.) About 37% of jobs posted in the third quarter of 2022 included pay information from the employer, the spokesperson said.
Joe Stando said if the salary transparency law had been in effect earlier in the pandemic, it would have saved him time and disappointment during his job search. Stando said he had at least three job opportunities over the past year that fell apart over salary negotiations. Each time, the companies’ offers were below what he had requested.
“I would much rather have it coming out early on so that I can know before applying or early on in the conversation that we are maybe not aligned,” said Stando, 33, who lives in Queens and has worked in office administrative roles. “You can’t really negotiate unless they have all their cards on the table.”
Instead of disclosing salaries for New York City jobs, some companies might exclude workers in the city from applying for positions. When Colorado’s salary transparency law went into effect in January, some major employers, including real estate firm CBRE and drug distributor McKeeson, stated that Colorado residents would not be considered for remote jobs. (McKeeson and CBRE now post salary ranges for remote openings in Colorado.)
Grindlinger said he had talked to company executives outside New York City who might avoid having to comply with the city’s law by barring new employees from working there.
“Clients that are not based in New York, they just don’t know what they are going to do, or some say if that’s the requirements, we are not going to consider anyone working in New York City,” he said.
HOW COULD THIS HELP ADDRESS LONG-LINGERING INEQUITIES IN COMPENSATION SUCH AS THE GENDER PAY GAP?
Tae-Youn Park, an associate professor of human resource studies at Cornell University, said that research into salary disclosure laws that have been implemented elsewhere, including in Denmark, has shown that they help narrow the pay gap between men and women.
In the United States, women made about 82 cents for every $1 men earned in 2020, according to the U.S. Bureau of Labor Statistics, which said that pay inequity is constant across almost all occupations. The gap is larger for women of color.
Park said that the salary disclosures in New York City would likely force managers to compare their salaries to those offered at other companies and make adjustments. Also, employees might feel empowered to confront their bosses if the ranges showed they were underpaid.
“It will give them an opportunity to raise their voice with objective data,” Park said.
This article originally appeared in The New York Times.
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