New York State pay transparency law goes into effect Sunday

Job seekers on Long Island and throughout the state will be able to see how much an employer is willing to pay when looking at job postings, under a state law that goes into effect Sunday.

The pay transparency law, signed by Gov. Kathy Hochul last year, requires employers with four or more employees to disclose “good faith” salary ranges in job postings, both externally as well as internally. The intent behind the law is to help address pay inequity issues and discriminatory wage-setting and hiring practices, according to the state.

The law presents both potential benefits and real challenges for employers, employment law attorneys said. New York City has had a pay transparency law in place since November.

“It is going to force us to create some level of pay equity,” said Christopher M. Valentino, principal at the Long Island office of Jackson Lewis. “Now, I don’t believe there are employers out there who are saying to themselves 'We're going to pay our male employees more than we're going to pay our female employees.' But the statistics would show that that’s exactly what happens.”

Valentino spoke about the law during an informational session Thursday organized by the law firm and the Long Island chapter of Society for Human Resource Management.

He said that in addition to promoting pay equity for women and people of color, the law could also help increase employee trust in their organization, making worker retention easier, and could give employers a potential advantage against competitors as virtually all employers will have to publicly show pay ranges for given positions.

“At the heart of pay transparency, or at least this iteration of pay transparency, there are valuable things,” he said. “There are detriments as well.”

One immediate challenge is that the state has yet to release any detailed guidance or best practices for how employers should comply with the law, said Timothy Domanick, another principal at Jackson Lewis who also addressed the crowd of HR professionals.

Compliance details unknown

As a result, employers with specific questions or varying pay scales and a wide array of job titles, may not be sure how best to comply with the law.

“The law is the law and it’s black and white, but it’s a question of how do you interpret it,” Domanick said. “We have to wait and see what the state says. In a perfect world the state will be more so in educational and compliance mode versus enforcement.”

Under the law, any person claimed to be aggrieved by a violation of the transparency law can file a complaint with the state Labor Department. Employers found to violate the law can be charged with a civil fine of up to $1,000 for a first violation, up to $2,000 for a second, and up to $3,000 for a third violation.

Valentino said potential challenges for employers included increased employee turnover as workers leave for higher advertised wages elsewhere, and pay compression, where workers of a certain level of experience and pay will see what newer hires are offered, leading to demands for higher wages up the chain.

“While the goals of pay transparency may be very worthwhile and altruistic it has unintended consequences,” he said.

Employers may see a mixed picture, but worker advocates see no negatives.

“All workers and all job seekers will benefit with pay transparency,” said John O’Malley, legislative coordinator for Communications Workers of America, Local 1180 in Manhattan. The local, which represents public sector administrative workers and nonprofit employees, has been advocating for pay transparency laws in both New York City and the state.  

O’Malley said without transparency, employers can hide discriminatory hiring practices by offering new hires vastly different pay rates for the same work based on a variety of unrelated factors, such as race, gender and sexual orientation, without workers' knowledge.  

“Study after study shows that employers tend to offer different rates depending on who they are talking to,” O’Malley said. “When your coworkers’ pay is hidden behind the curtain it gives you less leverage and limits your ability to understand where you fit into the organization.”