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Pay Transparency Laws Are on the Rise and They Come With Surprising Complications

November 22, 2022

New York City’s Pay Transparency Law went into effect on Nov. 1. Employers with four or more employees, and at least one employee that works in New York City, must post starting and ending pay ranges on job postings and advertisements. The law applies to workers at the employer’s site, in the field, and for those who work remotely at a home located in New York City. The expressed goal of statutes such as New York City’s law is to eradicate systemic discrimination, achieve pay equity, and level the playing field for employees to negotiate salary with greater knowledge. However, these laws have some unforeseen complications that may pose challenges for multi-state employers, and for those employers with remote workers.

For example, an employer located in Arkansas posts a job opening for remote workers on an online nationwide recruiting site. It is likely the company has some employees who reside in New York City but the recruiter posting the advertisement didn’t specifically check. A candidate who resides in Brooklyn, New York sees the ad and believes he is a great candidate for the job. But, the listing does not include any details about the salary range. Is this a violation of New York City’s Pay Transparency Law, or other states that have similar laws or are in the process of enacting such laws?  New York City has not yet promulgated regulations on how it will interpret its new law, so we do not yet have a definite answer to this question. But, such a scenario may indeed be a compliance issue for employers who hire remote workers throughout the United States without a geographic restriction.

Another potential challenge for employers is that pay transparency laws place scrutiny on the salary established for new positions. But what about employees who hold similar jobs in the company – the incumbents? Without an analysis of pay equity for existing employees before establishing a new salary range, employers may face claims of equal pay violations if the new or old salary ranges fall disparately on one or more protected classes or upon one gender. As such, employers facing pay transparency laws may want to undertake a review of their compensation practices with their employment attorneys to ensure compliance with any federal, state, or local laws relating to equal pay, as well as pay transparency.

Another likely overlooked complication arises for employers who wish to sponsor foreign nationals for green cards through the PERM labor certification process, which requires employers to post job advertisements for the sponsored position in the area of intended employment. Employers subject to the new pay transparency law will likewise need to post the wage range for PERM positions in several forms of local media, including the Sunday newspaper of general circulation and the State Workforce Agency website. While this may come as little surprise to employers based in New York City, a growing number of positions can be performed fully remotely from anywhere in the US. For a fully remote position, the PERM advertisements need only be run in the area of the company’s headquarters. If this new law extends to any position that could be performed in New York City, this could potentially result in employers nationwide having to include wage ranges in PERM advertisements for jobs that permit remote work from anywhere in the US.

Other states have pay transparency laws on the books, such as Colorado, or on the horizon, like California and Washington, whose laws go into effect on Jan. 1, 2023. Jersey City, New Jersey has a law similar to New York City’s law. Other states require disclosure if an applicant requests such information, before making an offer, or after interviewing, such as Connecticut, Ohio, and Nevada. We are monitoring these laws closely and the impact that they may have on our clients. If you have any questions, please direct them to the Clark Hill attorney with whom you work, or to Vanessa Kelly and Julie George.

The views and opinions expressed in the article represent the view of the authors and not necessarily the official view of Clark Hill PLC. Nothing in this article constitutes professional legal advice nor is it intended to be a substitute for professional legal advice.

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