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Workers must confront gaps in wage transparency laws

On Behalf of | Jan 4, 2023 | Firm News |

New York Gov. Kathy Hochul recently signed into law a bill requiring pay transparency in hiring. This follows similar legislation in other states. However, employers are finding ways to evade these laws.

New York’s laws

Joining other jurisdictions that added transparency to employment law for employees, New York City imposed a transparency requirement in November, requiring employers to post pay ranges with advertisements for open positions.

The state law passed at the end of 2022 will also require employers to list salary ranges for advertised positions and promotions once it takes effect later this year.

These laws are intended to provide workers with critical information and reduce discriminatory wages and hiring. Proponents hope that this disclosure will allow workers to apply for jobs without undercutting their salary requests.

Evasion

According to media reports, there are flaws in the laws enacted in New York City, Nevada, Colorado, and Connecticut. These defects may also apply to New York’s state law when it takes effect.

Some employers place advertisements containing artificially low pay ranges to keep ranges from increasing. These also are also intended to make it difficult for current employees to learn that they are underpaid.

Many times, it is difficult to obtain exact salary numbers. There are many pay ranges for a job, depending on the organization’s compensation philosophy, the type of job advertised and the demand for labor in that market.

In New York City, employers posted pay ranges that were up to $100,000 wide which made them almost useless. Employers in Colorado reduced the volume of their postings when that state’s law took effect.

Typical pay ranges should be between 40% and 60% above the minimum pay for a position. The top range for a position starting at $50,000, for example, should be between $70,000 and $80,000.

However, data compiled from over 100 sites indicate that the range is around 28% for job listings in this country. The highest advertised pay for the position may be $64,000, for example, although the actual pay may be $80,000 for some workers.

Salary compression

Some employers have worsened the situation because the demand for workers over the past two years was intense. There has been a rise in salary compression where employers keep raising starting salaries to attract job applicants and narrow the difference between starting salaries and what their current employees receive. There are also fears that current employees are not receiving accurate wage information.

It remains to be seen how New York will enforce its new transparency law. Attorneys can help protect workers’ wage rights.