Thinking "Big Picture" as Pay Transparency Finally Arrives in NYC

As the New York Times highlighted, November's arrival means that NYC's pay transparency law will finally go into effect. The basic compliance framework seems somewhat simple - most NYC employers will now be required to include a "good faith" salary range in job postings (where positions are based or "could be" based in NYC). But for employers who have not embraced pay range disclosures before, the "big picture" looks a little more complex.

The real work will come in ensuring that an increase in salary transparency doesn't lead to an increase in other pay-related issues. Employers should focus on evaluating existing pay data and identifying any potential pay equity gaps among existing workers (in New York, this inquiry should focus on protected characteristics like race, sex, age, etc.), given that existing employees and applicants alike will have increased visibility into company pay practices. Where pay discrepancies among similarly situated workers do exist, employers should be ready to offer legitimate reasons for those disparities, such as seniority, performance level, experience, education, or other acceptable factors.

Employers must also decide on an effective approach to complying with pay transparency laws and a workable (and well-documented) implementation program. Given the numerous jurisdictions that have adopted pay transparency rules in the past year - with more likely on the way - some companies are opting to take a universal approach, and are now including compensation information in job postings nationwide. Other companies will take a "wait and see" approach, aiming for compliance in mandatory disclosure jurisdictions like NYC and Colorado for now, with the potential to build upon that framework as pay transparency laws proliferate around the country. Come January 2023, California and Washington will also join the pay transparency fray with their own rules around job posting disclosures. Regardless of the approach chosen, companies can no longer wait to dive into this issue, and should consider the "big picture" here when plotting an appropriate course.