New York City has joined several other U.S. cities with its own pay transparency law.
Employers in the Big Apple now must modify how they advertise job openings. NYC’s Salary Transparency Law is the latest addition to a suite of anti-discrimination protections for New Yorkers who are seeking employment. The law went into effect on Nov. 1, 2022.
What is pay transparency and what does it mean for my small business?
Pay transparency laws are designed to reduce gender and racial gaps in pay. These laws require employers to include information about a job’s salary when posting an advertisement for new positions, promotions or transfer opportunities.
SHRM reports that although closing the gap is the goal, experts don’t expect the gap to disappear quickly. In an article on SHRM’s website, Mariann Madden, co-leader of WTW’s North American fair pay team, said the law is a step in the right direction.
Even when companies have some policies in place, Madden said, other actions are needed to get salary right, including governance and management of pay policies.
Cities aren’t the only locations to add pay transparency laws. California, Colorado, Connecticut and Nevada have passed laws requiring employers to include salary ranges in job postings. And, Washington state’s law will go into effect on Jan. 1, 2023.
“Regulatory requirements are only one factor in the expected increase in disclosures and communication about pay,” Madden said, noting that job hunters and employees alike want to know and understand that they are being treated fairly.
Will employees complain?
In keeping with compliance standards, it may seem easy to determine the newly listed position’s salary range and post it accordingly. However, you also may receive questions about salary ranges from current employees.
WTW’s 2022 Pay Clarity Survey found that 17% of companies already disclose pay information in U.S. locations where it is not required by law. The survey, published in September 2022, also reported that some companies that disclose pay information had a 38% uptick in questions from current employees.
Companies reported that when current employees have access to the salary ranges for new positions, they might see a wage discrepancy. In that case, the new position’s salary must be aligned with the current salary structure. For example, when posting a job for a management position, be sure that the position pays a higher rate than the subordinates are paid.
Business owners should perform a thorough salary range evaluation to illustrate why each role receives its allotted pay.
If your business uses a third-party agency in the recruitment process, you must ensure that the organization adheres to the new law’s provisions to avoid legal complications.
The automated solution
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