The NYC Pay Transparency Law is Coming – Are You Prepared?

Kate Conroy
October 17, 2022

Pay transparency is coming to New York City effective Nov 1, 2022. We’ve known this disclosure requirement has been coming for a while, but now it is right around the corner. Are you prepared for the impact that pay transparency will have on your organization?

What is the NYC Pay Transparency Law? 

Employers will be required to list minimum and maximum salaries on all job postings in New York City. Employers who fail to comply with the statute face civil penalties of up to $3,000 depending on employer size, good faith, the gravity of the violation, and any history of previous violations.

Who Does the Pay Transparency Law Impact? 

If you are impacted by the NYC Pay Transparency Law and you haven’t been transparent about your compensation, you’re probably not looking forward to November 1st. If you aren’t impacted by this because you don’t hire in NYC, hold back on that sigh of relief. Laws requiring employers to disclose pay ranges are becoming more and more frequent and they’re likely coming to an area near you in the not-so-distant future. Pay transparency laws, some incredibly similar to the NYC Pay Transparency Law,  already exist in California, Colorado, Nevada, Washington, Maryland, and New Hampshire.

However, in reality, the compensation cat is already out of the bag. Your employees are already talking with each other about their compensation. And there is nothing you can do about it.

Well…. Not exactly. You can’t stop employees from talking about their compensation, in fact, it is a legally protected right. You also can’t keep your team from seeing the salary ranges you’re now required to post in your job openings. But you can change the narrative around compensation. Pivot the discussion and turn it around from a conversation where employees feel like they are being taken advantage of into a conversation where they feel valued and understand the investment you are making in them.

How to Prepare for the NYC Pay Transparency Law

Many people feel uncomfortable talking about compensation openly. However, that doesn’t stop employees from discussing it around the water cooler and wondering if their compensation is fair compared to others. The key to preparing for the NYC Pay Transparency Law is to prepare to have confident conversations about compensation.

Step 1: Pay Structure 

The first step to being able to openly discuss compensation is to make sure you have a pay structure that makes sense. If your approach has been to ask candidates what they want to be paid and then provide that amount- you’ve been doing it wrong. Your salaries are likely all over the place. You might have people in similar positions being paid very differently. This is a high-risk compensation strategy and is prone to unconscious bias as certain demographics are more likely to ask for higher pay than others. Maybe you’ve been trying to pay your team the least amount possible. Although it may help with your bottom line, this is also not a strategic compensation approach and is another recipe for bias.

At Red Clover, we’ve seen it all. We’ve consulted with companies who have never connected the word “Compensation” with the word “Structure”, and make random pay decisions with no data support.  We’ve also worked with companies that have a compensation structure in place but have strayed from it to compete with a tough job market and sky-high inflation. We methodically analyze your internal data and the market to create a salary structure that is aligned with your budget and built to scale with you. Including clear minimum and maximum salary or hourly wage for each position. Further, we create paths to “fix” any issues with individual compensation, including issues with pay equity.

Step 2: Education

Once your structure is in place, the next step is education. It’s going to take time to become comfortable with a high degree of transparency. However, your employees need to understand why they are paid the way they are and see the connection between the contribution they bring to the organization and their compensation.

Start by educating your organization’s leadership and management. Let them know the strategy behind your compensation philosophy. Make sure they are comfortable with how a salary structure functions and how job bands and salary ranges work within a salary structure. Provide training to your teams, preparing them to have challenging conversations with employees, and work on educating all employees on the basics of compensation and what they’ll see posted.

Step 3: Communication

When your employees see a job posting with a salary range, their eyes will go straight to the top of the range. If the job is similar to theirs, they’re going to wonder why they aren’t making the most they can for their band. Whether they ask or not, this is what they will be thinking. Get ahead of that conversation as much as possible. You’ve already primed them by educating them on how your compensation structure works. Reinforce those messages and be prepared to tackle difficult questions.

Often when an employee is upset about their compensation, it’s deeper than just the compensation. It can be about opportunities for advancement or recognition of the work that they are doing. Sure, everyone wants more money, but you won’t resolve the underlying issue simply through a raise. When an employee asks to talk about compensation, lean into the conversation and try to peel back the layers to what the employee really needs to keep them engaged and drive their performance.

Need Help Preparing For the Impending Pay Transparency Laws?

Let’s stop avoiding talking about compensation. The conversations are already happening and for you, as an employer, not being transparent is no longer an option. If you are struggling to navigate compensation with the changes required by the NYC Pay Transparency law and similar laws- Red Clover has your back! We love to talk about compensation and our proven process for putting a strategic pay structure into place, polishing up a structure that has gotten dusty (and maybe a little warped), and how you can communicate compensation to your team to drive performance and employee engagement. Contact Us to get started!

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