What to know: New York City and Washington salary disclosure laws

New York City and Washington state have just passed new pay transparency legislation, joining a patchwork of laws that’s emerging across the US, though the laws won't come into force until November 1, 2022, and January 1, 2023.

Below, learn what's in the laws, why they’re coming, and what they’ll mean for your business.

What's in the new laws?

NYC: The legislation makes it illegal for an employer to advertise a job, promotion, or transfer opportunity without stating its minimum and maximum pay rate. (So open-ended ranges like "$20 per hour and up" are not compliant.) All employers with four or more employees – only one of them needs to work in-person or remote in New York City – must comply. Employment agencies are included, but temporary help firms seeking applicants to join their worker database are not.

Washington State: Employers with 15 or more staffers will need to disclose a wage scale or wage range in all job listings (externally and internally). In contrast to the NYC law, which only applies to the base salary, the Washington law covers all benefits and compensation, including commissions, bonuses, health insurance, and leave entitlement. However, questions still remain on how some of the law’s provisions will be interpreted.

What's the goal of these new laws?

Both Washington and New York States have already introduced laws banning employers from asking job candidates about salary history. These new ones will supposedly continue addressing pay inequalities.

An NYC Council report in 2021 found that for every dollar white men earn, white women make 84 cents, Asian women make 63, Black women earn 55, and Hispanic women earn 46. Requiring employers to disclose pay rates might help close that pay gap, while building the trust needed to attract and retain workers in today’s tight labor market. Proponents say it also saves both parties from wasting time on recruiting and interviewing when compensation expectations don’t line up.

Has there been pushback?

The business community has made their opinions known: Groups argue the laws will have unintended downstream impacts, including actually hurting diversity hiring. Employers seeking to diversify their management ranks sometimes offer higher pay for candidates from under-represented groups, for example. But business groups fear this practice could lead to legal action if they pay more than their stated maximum. Also, potential employers could use the same newfound transparency to look up candidates’ past salaries, which could further entrench the pay gap.

One of the other major concerns from employers: Pay discrepancies among existing employees could come to light and cost them workers. The ongoing labor crunch – especially in hard-hit retail and hospitality – has forced employers to increase new hires’ pay to well above what their existing employees were making. Many can’t afford to adjust all of their pay rates, which could potentially kill jobs and push employers out to more ‘business-friendly’ jurisdictions.

What comes next?

A coalition of firms in NYC, including JPMorgan and Goldman Sachs, lobbied successfully for several major amendments, including pushing back the start date to November and giving employers a pass for first-time violations if they fix them.

Outside of New York: California, Colorado, Connecticut, Maryland, Nevada, and Rhode Island have similar legislation, though the specifics vary. Johnson & Johnson, CBRE Group, and others have already said they would not hire remote workers in Colorado following its salary disclosure law.

Employers should act now to get ready for the new laws, especially given the growing number of jurisdictions requiring salary transparency:

• Conduct a pay gap audit to identify any pay inequities among your existing workforce.
• Establish a plan to iron out any discrepancies, including setting consistent, transparent pay scales where they don’t exist.
• Develop a process for publishing salary ranges in job postings.
• Train hiring managers and others on the issues surrounding pay transparency.
• Consider drawing up a cross-jurisdiction pay transparency policy to minimize compliance risks when working across multiple states.

With decades in the staffing field, Adecco has worked with employers through countless changes in employment law, compliance regulations, and cultural shifts. Learn more about employer resources pages for more on all the trends shaping the world of work. And talk to us about how we can help prepare your workforce for whatever comes next.