Next week, they will be looking for a job start to know much better what many employers are willing to pay, as well as the employees of a company.
Although there is already a patchwork of state and local laws aimed at improving pay transparency, many companies still do not disclose what they pay up front. But two new laws coming into effect soon could have the biggest impact still about employers and job seekers across the country.
On November 1, New York City will require employers with four or more employees (at least one of whom works for the city) to provide a “good faith” salary range, listing a minimum and maximum base salary or hourly wage. in all job advertisements.
Then, on January 1, 2023, a similar law will go into effect for California employers with at least 15 employees. Organizations must include the wage or hourly wage range they “reasonably expect” to be paid for a position.
Both laws will be very broad, as they affect two of the most populous areas in the US and will apply to companies that post jobs that can or will be done in New York City or California, or that would attract applicants who live there.
The bottom line: It will affect “thousands of employers” across the U.S., even if they’re not headquartered in New York or California, but just do business there, said Joy Rosenquist, special counsel at the labor law firm Littler Mendelson PC.
While the New York and California laws will increase pay transparency, they pose many compliance questions for employers.
“There are a lot of gray areas that need to be worked through,” Rosenquist said. He noted that California law, for example, is not clear enough about how job postings for remote jobs should be handled.
And just because employers have to share salary information upfront doesn’t mean it will be presented the same way, said John Haney, a labor and employment attorney at Holland & Knight.
Employers base wages on many factors, such as job competition in a particular location and legal requirements. For example, Haney said, a position cannot legally be exempt from overtime unless it pays above a certain threshold (which varies from state to state) and meets the so-called duties test, which makes it clear that the job cannot. they primarily include duties that are more typical of overtime-eligible jobs.
So companies can end up displaying multiple ranges based on location, Haney said.
Also, because market pay adjustments can happen quickly, “an employer could be in violation of the law if the pay scale changes after the initial job posting is posted,” said Emily Dickens, the Humane Society’s head of government affairs. Resource Management, in an August letter to California lawmakers.
Or for some jobs, employers may face the new requirement. Under New York law, for example, employers are not required to disclose salary ranges unless they advertise the job in writing.
“Personal journey, [such as] a phone call or conversation would not be covered because it is not a written advertisement,” said attorney Carol Goodman, a partner at Herrick, Feinstein LLP.
But, he added, it is not clear whether a personal disclosure by letter or email should be disclosed.
And while the law will apply to advertisements posted by an employment agency or recruiting firm that a prospective employer wants to hire, there is an exception when the agency hires a temporary “applicant to join their workforce.” New York Commission on Human Rights.
The new laws will change the conversation about compensation for both job seekers and current workers. “It’s going to be more constructive,” said Allison Rutledge-Parisi, senior vice president of people at Justworks, a cloud-based platform that provides payroll, benefits, compliance and human resources support for small businesses.
Applicants will not have to invest weeks or months in a recruitment process before finding out if a potential employer is willing to pay. Publicly disclosing salary can deter some well-qualified candidates from applying in the first place if the advertised range is lower than what they’re looking for, SHRM’s Dickens noted. Additionally, if a company is finding it difficult to attract the right talent within the publicly advertised salary range, it may need to reconsider what the competitive range is.
And for current employees at companies that advertise jobs, they now have a point of reference to start a discussion about their pay with their manager, but previously had a hard time knowing if they were being paid competitively.
“He is so strong. … Now you have real data,” said Laura Mazzullo, owner of staffing firm East Side Staffing. “This will empower those who never knew how to ask for more.”
But employers need to educate managers about the organization’s salary policies and how they can answer employee questions, such as why their current salary is at the end of the range the company is advertising for the same role.
If the answer to that question is that those who are paid at the highest level bring a unique skill set to the role, the manager can discuss what the employee needs from the company to raise the salary through training or experience. scale it up and set it up for that, Rutledge-Parisi suggested.
However, if a manager can’t clearly explain why pay disparities exist for the same role and a company doesn’t address unfair gaps between what current employees make and what new hires are paid, morale will suffer.
“I think we’re going to see high turnover numbers unless employers are willing to pay the market,” Mazzullo said.
At the same time, he added, the new laws may cause companies to slow down hiring a bit at first while they figure out the scope of these new requirements, especially for companies that realize they have pay equity issues. “From the lens of a CFO, this is going to be complicated,” Mazzullo said.
Correction: The original version of this article misspelled Laura Mazzullo’s last name.