New York City postponed enforcement of salary transparency until November after advocates and business leaders clashed on whether pay disclosure is the best way to close a persistent gender gap.
The City Council, which voted for the delay on Thursday, also exempted companies from being charged a monetary fine for the first violation, and limited lawsuits related to the pay information to current employees.
The approved amendments represent a partial win for businesses that had lobbied against the law, which was originally set to take effect by May 15. But business groups suffered defeat on most of their demands, including provisions that would limit the companies required to follow the rule and allow businesses to post general “help wanted” listings, without a specific role.
New York’s five borough chambers of commerce and the Partnership for New York City, a business group composed of the city’s largest companies, including JPMorgan Chase & Co. and Goldman Sachs Group Inc., pushed back against the law and said many of the 200,000 businesses and 30,000 nonprofit organizations have little knowledge of the legislation ahead of the May 15 deadline.
Businesses had asked to exempt companies with fewer than 15 employees and allow companies to post general “help wanted” listings, without a specific role, and not include salary information. Those proposals were cut from the amendments being considered Thursday.
“We are pleased that the New York City Council heard the concerns of advocates and workers, took them seriously, and made meaningful changes,” said Beverly Neufeld, President of PowHer New York, a statewide network of organizations and individuals that had pushed for the original version of the pay rule.
Pay disparity
The ultimate goal of pay transparency laws is to help reduce a persistent pay gap between men and women—particularly women of color. States and cities are also increasingly prohibiting companies from asking candidates what they earned in previous jobs and banning employers from disciplining workers who share their own pay information with others.
In the first quarter, White women who worked full-time earned 83 cents for every dollar men took home, according to quarterly data from the U.S. Bureau of Labor Statistics. For Black women, the gap with White men was 71 cents to the dollar, and Hispanic women earned only 64 cents on that basis, the data showed.
“It’s hand-to-hand combat on pay,” said Natasha Lamb, a managing partner at Arjuna Capital, which is pressuring companies to disclose more information about compensation. “Companies don’t want to admit there is a problem. But we have a societal problem and that same structural bias exists within companies, which are their own microcosms of a structural bias against women and people of color.”
Colorado, Nevada, Connecticut, California, Washington and Maryland require companies to produce salary information with job postings, or upon the request of job seekers. Rhode Island will join them in January 2023. The New York City rule is the first for a municipal government.
“This bill is an implicit acknowledgement that legislation regulating the workplace should involve consultation with employers prior to enactment. We hope this sets a precedent for the future,” Kathy Wylde, President and Chief Executive Officer of the Partnership for New York City, said in an e-mail Wednesday.
New reality
Companies are still too focused on complying with regulations and not yet in tune with the reality that pay transparency is becoming an expectation for future employees, said Tauseef Rahman, a partner at consultant Mercer who has studied the evolution of pay transparency. Publicly held companies already have to disclose the pay of the top executives in annual filings, and there are requirements to show the ratio of median pay to CEO salaries. In the U.K., employers must report median pay gaps.
Among U.S. companies with operations in New York City, 63% said they would only do what was required by law, and 25% said they were exploring a more standardized system for sharing pay info, Rahman said, citing a recent Mercer survey. Only 12% are currently sharing pay ranges on job advertisements, the data showed. Companies not only need to release the numbers, but they also need to explain their pay system so that employees understand any variability from what they earn to what they see advertised, he said.
What happens in New York City with pay transparency is crucial in terms of legal implications given so many major employers are based there, said Daniel Zhao, a senior economist at Glassdoor, which collects pay information submitted by employees. The ability to share pay information anonymously means employers can’t just ignore the issue, he said.
“You can’t put the pay transparency genie back in bottle,” Zhao said. “That data is out there. People are going to be able to find it.”
—With assistance from Laura Nahmias.
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