What NYC’s Pay Transparency Law Means for You
Job applicants in New York will soon have an easier time deciding whether or not to respond to a job offer. The New York City Council has passed a bill requiring employers to provide a minimum and maximum salary range for each position. The legislation, which will come into force in May, aims to correct pay inequalities and discrimination.
“If people don’t know what other members of their organization are being paid to do the type of work they do, they won’t have the opportunity to speak out against unfair pay disparities,” says Jeff Moriarty, executive director from the Hoffman Center for Business. Ethics at Bentley University. “Knowing what people are paid is good for employees who are discriminated against, as well as for the companies themselves.”
” Equal work, equal pay. . . is still an issue, and this new law addresses ‘fairness’ in ‘diversity, equity and inclusion,’” says Matt Kerzner, director of the Center for Individual and Organizational Performance at accounting firm EisnerAmper.
The move follows a trend of pay transparency as states such as Colorado, Connecticut and Maryland pass similar laws. Experts suggest other cities and states may soon follow suit.
A better candidate experience
Whether legally required or not, including salaries in job postings can improve the recruitment process for employers and candidates. Erin Lau, head of HR services at Insperity, says business leaders across all locations should proactively address this pay transparency trend and leverage it for competitive advantage.
“When companies list salary ranges, it can have a positive impact on the brand,” she says. “Transparency is passed on to job seekers and helps build trust by sharing the range. Since there are no deep, murky secrets about how the company compensates its workers, it could attract more highly skilled workers.
Transparency saves time and allows both parties to cut to the chase. “Candidates need to know how to compare jobs and whether [they] will match their specific compensation needs,” says Margot Moellenberg, chief financial officer of staffing solutions company Wonolo. “If the salary is not posted, both parties can spend weeks going through a process that ends up disappointing one or both.”
Jamie Kohn, director of HR practice at Gartner, agrees: “Recruiters spend a lot of time building relationships with candidates who will never accept an offer,” she says. “By being transparent about the pay scale, companies can spend more time with candidates than they can afford to hire. In fact, even before the pandemic, 25% of candidates said they had opted out of a screening process hiring because the compensation for the position did not meet their expectations. With rising inflation and wage growth, this has likely increased.
Transparency also helps employers stay ahead of misinformation, says Kohn, noting, “Salary information is out there. Companies have two options: share their pay scales or risk candidates getting incorrect information elsewhere. »
In Gartner’s 2021 Candidate Panel Survey, 75% of candidates said they had visited at least one employer review website such as Glassdoor, Salary.com or Payscale in the past year, says Kohn .
The potential downside and a solution
Companies located in certain states may have a harder time being competitive if they hire remote workers, leading Kerzner to have mixed emotions about the law and its ripple effect. “How does this law make it fair for organizations that operate in states that have a lower cost of living and pay lower wages as a result?” he asks. “It can also cause a problem with people leaving their jobs in their local community for better paying jobs and never seeing the state or spending their wages in the local community in which they work. It could be like robbing Peter to pay Paul.
To answer, Kerzner recommends companies periodically review their salaries and benefits to stay competitive in a changing marketplace. Moriarty adds that pay disparities may have crept into an organization over time, and sharing salary information can help companies develop and maintain better compensation systems.
“Companies can unintentionally discriminate against some of their employees,” he says. “Publishing salaries, even pay scales, helps solve this problem. Companies should be able to defend their compensation systems and decisions. If they can’t justify the employee’s salary, chances are their salary will be . . . based on arbitrary or irrelevant factors.