More US states are asking employers to limit how much they pay

A strange tradition of hiring in America is that job seekers want to ask a question first, which is often addressed last: How much does a job really pay? In the working world, it’s common for employers to keep that important information secret, keeping applicants in the dark, while giving hiring managers a competitive advantage in setting salaries.

Now, a growing number of US states are moving to shed light on the issue of starting pay. The new laws require companies to disclose salary ranges in job postings and on their websites. The rules represent increasing pressure for greater transparency on compensation and are aimed at increasing bargaining power between employers and employees, empowering workers, and bridging the long-standing wage gap for women and people of color.

In California, under a law signed last week by Governor Gavin Newsom, effective January 1, 2023, companies with more than 15 employees must include wage limits for jobs and share the same information with current employees. In New York, a law requiring private sector employers to disclose salary ranges in job postings is awaiting the signature of Gov. And Colorado, Connecticut, Maryland, Nevada, Rhode Island and Washington have enacted their own wage transparency laws.

“Goodwill” Salary Range Required

In New York City, legislation that took effect November 1 requires businesses to include a “goodwill” salary range for each job advertised. Employers are not required to disclose information about bonuses, benefits and other forms of compensation.

“Going forward, every time a job is actually posted on a website of type type, in the workplace, or is advertised in a newspaper or online, [job seekers] One should expect to see a salary range for that position if the job is in New York City or can be done in New York City,” Domenick Camacho Moran, a New York-based employment attorney at Ferrell Fritz, told CBS MoneyWatch. that there is pay equity based on the work performed as opposed to the person applying for the job.”

In other words, if an employer advertises a job that pays between $60,000 and $90,000 per year, anyone who applies for the position can expect to start compensation within that range. regardless of their age, gender or race.

“It’s a situation that in the past tended to favor employers who could ask about your salary and not tell you what it was going to offer,” said David Gordon, a New York City law firm. A partner exercise in the employment of Kay Mitchell, Silberberg and Knup.” This is part of an overall shift of information from employer to employee that will help some employees negotiate their compensation.”

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“Employers must show their card”

The New York City law works in conjunction with a January 2020 law that prohibits employers in the state from asking potential and current employees about their pay history, which seeks to close the pay gap and eliminate potentially discriminatory compensation and hiring practices. It was also enacted to help

The laws would help workers decide which jobs they would apply for based on salary ranges, as well as discourage employers from seeking “discounts” on employees who might otherwise accept a smaller paycheck.

“Employers are in a position where they have to think very carefully about what they believe in good faith that a particular position should pay,” Jason Habinsky, president of Haynes Boone’s employment practice in New York City, told CBS MoneyWatch. “Employers have to show their cards and put them on the table first. You can’t make a decision based on someone’s membership in a protected category.”

Salary should be disclosed as a range, not “up to” or “at least” a fixed figure format.

“A potential risk is that some employers are not going to act in good faith and, instead of providing a good faith limit, give themselves an opportunity to cover more than they would normally be provided with. Will provide a very wide range. Decide what they’re going to pay someone,” Habinsky said. “It doesn’t serve the purpose of saying that someone is paid between $5 and $5 million.”

Could lead to more word-of-mouth hiring

Under New York City law, companies are not required to disclose components of compensation, including bonuses, benefits, commissions or tips. And the rules only apply to external job ads and internal postings. This means that if an employer verbally takes a new hire, they are not required to disclose the salary range of the role before making an offer.

“The law does not prohibit employers from hiring without using an advertisement,” said New York employment attorney Josh Zuckerberg. “There’s no law that says you have to advertise posts.”

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This can lead to more word-of-mouth hiring.

“Some types of employers might call head-hunters and say, ‘We’re looking for this type of position, what can you find for me?’ – If you don’t want to broadcast pay,” Zuckerberg said. “There is a chance that there will be less transparency, not more.”

“potential consequences”

The hot job market is raising wages for workers and forcing employers to pay top dollar to attract talent. An employer may have to pay a new hire more money to perform the same job as an existing employee, potentially creating tension and division in the workplace.

Habinsky said, “There are a lot of potential repercussions as a result of this law. You can have an existing employee who will look at what potential employees are getting paid, and it can result in disgruntled employees and hurt feelings.” ”

According to workplace and employment lawyers, any employer with four or more workers, at least one of whom works in New York City, must be prepared to comply with the new rules.

“It would be prudent for any employer who does not wish to violate the law to monitor any job postings, internally or externally, to ensure that the law is required,” Gordon said.

Human resources employees should also be prepared to explain any pay discrepancies, said Carol Goodman, president of Herrick Feinstein’s employment practice.

“This will probably raise a lot of questions and human resources departments should be prepared to ask questions from existing employees, who may call and say, ‘I see a posting for the same position I hold but My salary is low,” she said. “HR professionals will want to be prepared to talk about this with their employees.”

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