A new law in New York City will require employers and hiring managers to include salary ranges for all job postings and advertisements.
The law, which was adopted on Jan. 15, is set to go into effect on May 15, and will be applicable to all employers with four or more employees. The goal of the regulation is to encourage pay transparency and lessen the gender pay gap by requiring employers to list the minimum and maximum salary that they would pay for each new position or internal transfer.
Supporters of the law say it could help attract employees that desire a clear range of what to expect in terms of payment and could encourage people to ask for more than they might usually ask for. However, the new regulation could also cause a backlash among employers, and encourage them to pursue remote workers living outside of New York City for their positions to avoid compliance with the rule.
According to Mark Goldstein, a labor and employment lawyer with Reed Smith LLP, “there was substantial backlash” when Colorado passed a similar salary transparency law last year. To avoid having to adhere to it, some Colorado employers started advertising for remote workers with job listings telling Colorado residents to not apply.
“It remains to be seen if we will see a similar backlash here in hiring New York City based workers,” Goldstein told FN in an interview.
As it stands right now, much is still unknown about how this new law will be applied. For example, it is unclear if the law would only apply to salaried workers or if it would also include hourly employees, which make up a major part of retail jobs across New York City.
The announcement of the law also comes amid a period of record high resignation, as employers across multiple industries struggle to fill hundreds of vacant positions. Almost 4.3 million people quit their jobs in December at a rate of 2.9%. The soaring quit rate has exacerbated labor shortages. In retail, this is making it difficult to keep stores staffed.
“I could certainly see [the new law] having potentially a chilling effect on the hiring of individuals in New York City rather than achieving whatever its stated purpose might be, particularly with the labor shortage, the great resignation,” said Goldstein.
For those business that require in-person work — like retail and manufacturing jobs — employers will not be able to resort to remote workers. In this case, employers would have to deal with implementing the salary ranges for each role, which will likely be a time-consuming task.
The new rule has already drawn opposition and criticism from other business groups in NYC. The Partnership for New York City, which has members such as JPMorgan Chase & Co. and International Business Machines Corp., told the Wall Street Journal that they are against the law.
“It’s just the wrong solution,” CEO of Partnership for New York Kathryn Wylde told the Journal, explaining how the law provides burdensome regulations to employers. “It should never have been allowed to go through.”
Ed Egee, the National Retail Federation’s VP of government relations and workforce development, also noted potential problems with enacting this type of regulation.
“Employers across all industries, including retailers, make salary offers to new hires based on a variety of factors,” Egee said in a statement to FN. “These state and local mandates hinder both the employee’s flexibility and the employer’s ability to consider a wide [range] of candidates for a given position.”