The NYC Salary Range Transparency Law is now in effect. However, the law gives us insight beyond updating and adding salary ranges to positions that can be performed in part or in full in New York City.
Moving forward, all job postings (including active postings advertised before November 1st) will require a ‘good faith’ and reasonable base salary range or rate range. This applies to internal and external ads as well as internal promotions. Though this looks as simple as adding ranges to jobs, there are implications down the line that employers should consider addressing now.
What Does the Salary Range Encompass?
The salary range or rate range should be expressed as a reasonable base pay range. Per the law, it cannot be open ended in any way. The only exception is a position that has no flexibility on the pay rate, where the minimum and maximum rate is the same – i.e. $50/hr. Employers and third parties posting on their behalf, will not longer be able to advertise positions as up to $100k, $100k+, based on experience, +/- $100k.
Defining a ‘Good Faith’ Salary Range
What qualifies as a reasonable or good faith salary or rate range? Is it a certain percentage for each position? Is it based on the position level within a specific department or division? While it’s temping to allow individual hiring managers to create ranges on an ad hoc basis, this may conflict with other salary laws, like California’s, that will come into effect in 2023 with reporting requirements. Employers should consider a standard or at least create parameters for these ranges.
Third Party Compliance
Third parties, like staffing or marketing agencies are also required to include these ranges when posting on your behalf. This includes social media ads or postings on sites like LinkedIn or Indeed. If a third party does not post these ranges as required, the employer is also in violation of the law. It is critical to ensure that all third parties are aware and compliant.
While the NYC law does not require specific documentation other than the listed base range, other upcoming laws will require documentation and reporting as part of their compliance. Employers should decide internally whether to document what will be used to determine the salary range. Likewise, they need to determine how those factors will be weighted in the decision to make an offer to a qualified candidate.
For example, what type of weight do you assign years of experience, level of education obtained, managerial experience, or skill sets? Adopting or at least discussing this type of documentation will prove to be helpful should a complaint be filed.
Applying the Law Across the Organization
All jobs that can be performed in part or in full in New York City must have the range listed. Thus, it stands to reason that all remote jobs should also have this requirement unless the job cannot expressly be performed within New York City. Employers may decide that it is in their best interest to apply the salary range requirement across the entire organization if there are operations within and outside of New York City.
Pay Compression- Current Employees:
One of the consequences of this law is that internal staff are now able to see what new hires are making in comparison. This leads to pay compression, where the new employee offers are close or equal to what current employees are making. Similar base pay can incite low morale and increased turnover as employers balance needing to attract new talent against potential internal discontentment. A strong and clear communications plan should be put into place if this is an area where there could be potential pushback.