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New City Pay Transparency Law May Still Leave Some Vulnerable To The Wage Gap

columbia news serviceA New York City pay transparency law aiming to narrow the gender wage gap now requires, as of November 1, employers to provide salary ranges on job listings.

The law requires New York City employers with four or more employees and one or more domestic workers to post a maximum and minimum “good faith” salary on every job, promotion and transfer opportunity advertised. For the law to apply to a worker in New York, at least one of the employees at the business must be operating from New York City, as stated in a fact sheet by the New York City Human Rights Commission, which will enforce the law. Employers could face up to $250,000 in fines for non-compliance.

While advocates see the new legislation as a step in the right direction for gender equity, some also have some concerns about loopholes in the law that might still allow companies to circumvent the rules.

Some business owners and their lobbyists had expressed concerns about how the initial version of the law could affect their ability to hire, particularly during the current labor shortage. They then negotiated and amended parts of the bill during the legislative process before Mayor Eric Adams signed it.

Women in New York State earned approximately $.86 for every $1 that men earned in 2019, according to a New York State Comptroller report published in March, the latest such data available. The city joins at least seven states and two Ohio cities in enacting some version of a salary range law to combat such pay gaps. At least another four states, including New York, are in the process of passing similar laws.

Advertising salary ranges will help advance pay equity by providing workers – including women affected by the pay gap – with the leverage they need to negotiate fair salaries during the hiring process, said Seher Khawaja, who worked on the city law as a senior attorney for economic empowerment at Legal Momentum, a New York-based legal advocacy group for women. “Wage information is some of the most important, most valuable information to workers when taking a position,” Khawaja said.

The law will bring any intentional or unintentional pay disparities within companies to the fore so workers will be able to judge if they are being paid fairly, said Beverley Neufeld, who also worked on the law as the founder of PowHer, a New York-based network of individuals and organizations focused on economic fairness for women.

“It’s going to be a game changer,” Neufeld said.

The pay transparency law was initially approved by the City Council in December 2021. However, it wasn’t signed into law by Mayor Eric Adams until May 12. Before it was signed, employers took issue with its requirements, implementation timeline and the lack of input from representatives of the 200,000 businesses and 30,000 non-profits affected by the law, according to a letter received by the City Council in April.

In their letter, the Partnership for New York City and the five borough chambers of commerce pushed for small businesses and nonprofits to be exempt from the law to avoid imposing another mandate on struggling firms. They highlighted concerns that minority- and women- owned businesses could be outbid by other firms. The letter also asked that the law apply only to jobs that are located at least partly in New York since multi-state and multinational corporations have different salary ranges depending on location and are subject to other states’ and countries’ laws (a change that was accommodated in the version of the law signed by Adams).

Further, if industries with severe labor shortages post the higher salary ranges that they are offering now, which might be lower than those offered in the past, current employees might raise questions, the business coalition argued. To avoid worsening the shortage, it asked for such industries to be exempt from the law.

Lastly, the coalition proposed that highly compensated jobs have no required maximum salary posting. If the salary maximum posted for such jobs doesn’t match the most qualified candidate’s expectations, a competitor might use the posted maximum to outbid the company for that candidate.

The coalition members did not reply to requests seeking comment. But after the law passed, the CEO of the Partnership for New York City, Kathryn Wylde, issued a statement saying, “the result will be to more quickly achieve our shared goals of racial and gender pay equity. We trust that this establishes a precedent for future collaboration between the Council and employers.” The law, as passed, is not perfect, advocates for women say. For example, employers only have to advertise pay, not total compensation. That leaves women still vulnerable to receiving substandard non-salary compensation, like stock options, vacation days and other benefits, than men.

Also, companies can use job titles to get around the law. Jobs with the same responsibilities have in the past been given different titles and salaries for employees of different genders, which can lead to pay inequity, said Neufeld.

One way to test the title problem is providing more specific job descriptions, said Elise Gould, a senior economist at the Economic Policy Institute, a think tank in Washington D.C that advocates on behalf of low- and middle- income workers.

“(Then) it would be pretty easy to diagnose if there was going to be ‘title inflation’ to justify higher salaries for the ‘more preferred’ demographic group,” Gould said. While business-set salary ranges must be in “good faith,” Khawaja still fears that companies have too much leeway to post overly broad ranges, having seen employers in other states discriminate within the maximum and minimum salaries listed.

The law also doesn’t accommodate pay transparency for current employees, said Neufeld. While it will allow employees to check job postings to see the salary range for their title, it doesn’t give them the right to ask for the salary range for their position once a year, which is something that the advocates included in the New York State bill and hoped would catch on in the City bill as well, said Khawaja.

Advocates also fear that companies may resort to posting a particular salary range before meeting with one candidate and then change it after their interview with the candidate. This would allow them to advertise different ranges to different potential hires, said Khawaja. Employment lawyers say some of these loopholes could pose problems in the future. While employers are required to post “good faith” ranges, the term is a red herring, said Silvia Stanciu, an employment attorney at New York-based law firm Phillips & Associates.

“Good faith is a very broad standard, and a term of art, but it does not place any clear boundaries on employers with respect to salary ranges,” said Stanciu, “In fact, it's hard to show bad faith unless you have specific evidence and insight into the true compensation ranges for a role. A company often will argue that decisions regarding compensation and benefits are driven by business needs and of course, it's a bit of a catch-all argument.”

In posting overly broad ranges, companies could make the minimum salary as low, or lower, than current employees’ salaries, including those who might be facing gender based pay discrimination, said Stanciu. This way, current employees are less likely to be able to identify pay discrimination among their peers and prospective employees.

“The new law requires employers to post a compensation range. It doesn't actually force them to pay people in a nondiscriminatory way, or to equalize current employees who are underpaid, with their counterparts,” said Stanciu, “although it is intended to discourage disparate treatment based on gender when it comes to compensation and salary.”

Still, should a current, female employee find out they are being paid differently than their male counterparts, they can under Title VII and the Equal Pay Act (at the federal level), the New York State Human Rights Law (at the state level) or the New York City Human Rights Law (at the city level) sue for discrimination in pay based on gender, said Stanciu. Women employees that notice they are being paid differently for the same job due to differences in job titles could sue under the same gender discrimination laws.

“The employees may have to prove that they hold the same job duties, same responsibilities, same title as their counterparts of the opposite sex, but are being paid differently, and they would have to give examples of the difference in compensation,” said Stanciu, “disparate pay cases can be challenging because most plaintiffs don’t have all the comparative pay data at the outset, and are generally not entitled to the data until after they sue and request that information in discovery.”

Similarly, if a company changes the posted salary range between interviews, candidates may have a claim for discrimination based on gender, but it would be difficult to prove. “It still remains to be seen whether the new salary range laws will remedy ongoing pay discrimination or if companies will continue their practices by employing intentionally overbroad ranges,” said Stanciu, “I think it's an open question.”

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