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Originally published in News.

Explainer: New NYC Pay Law

Esta Bigler

Esta Bigler ’70, director of the ILR School’s Labor and Employment Law Program and director of ILR New York City government relations, provides answers to questions about the impact of the New York City pay transparency law going into effect today.

Why is this law necessary?

Pay disparity is real – women make 83 cents on the dollar made by white men, Black women make 58 cents on every dollar and Black men earn 87 cents for every dollar. This law marks the first time people applying for jobs have a clear idea of the salary range.

Other pay laws such as the Equal Pay Act in 1963 and Title VII of the Civil Rights Act of 1964) have not worked. In 2017, New York City made it illegal for an employer to ask about salary history. In 2020, New York state followed suit and prohibited salary history questions.

Is NYC unique in passing this law?

No. New York City joins a growing number of jurisdictions that have enacted some type of pay equity legislation in recent years. States including Colorado, Rhode Island, Nevada, Connecticut, Maryland, Washington and California.

While New York City’s law affects just employers in the five boroughs, New York state lawmakers passed similar legislation in June, though Gov. Kathy Hochul has yet to sign it.

What does the new city law require?

Employers with four or more employees or with one or more domestic workers must include a salary range when advertising for new employees or making a promotion or transfer for a job to be performed in New York City. No longer can a job ad say salary commensurate with education and experience or maximum is $70,000. Employers must list the range in good faith.

Who enforces the law and what, if any, are the penalties for noncompliance?

The law is enforced by the New York City Commission on Human Rights. There will be a grace period to correct a violation, but fines could be as high as $250,000.

How will employees benefit?

Employees will now know the range a job pays, can decide to apply or not and can be in a position to negotiate with an employer about pay. They can judge what is happening at their own place of employment. The ultimate goal is for women and people of color to be paid what they are worth. This law should increase their bargaining power.

What will the impact be on employers?

Employers are consistently talking about diversity, equity and inclusion. This is a tool for a more diverse and equitable workforce. More questions will come from current employees about why they are paid so close to the minimum in the range. Some employees might say I was hired during a period when wages were lower or, like many women, I was not a good negotiator.

Some employees may become disgruntled, and this give employers a chance to fix it, make the salary more equitable and keep a great employee. Employees will start sharing information. This could also result in employers taking a good look at their compensation and job evaluation systems. This may cause more work at first, but ultimately be a benefit.

Employers may lose employees to high paying employers. Some employers worry that their competition may gain valuable information about their operations.

Employers can benefit from no longer getting applicants who want more money than the published ranges and wasting everyone’s time. Employers may get better applicants, and those employees will be happier.

Small employers without HR departments or access to employment lawyers may struggle trying to figure out the pay ranges. Remember, small employers are a major source of employment. I worry about these employers.

Does this law cover benefits?

No, an employer can sweeten the deal with bonuses, pensions and health insurance that is not covered by the law.

What steps are major national companies taking in terms of compliance?

Many big companies are moving forward and including pay ranges so they can compete for the best employees, no matter where they live.

More on the pay law: ILR School sponsors forum on new salary disclosure law.