NYC employers look for loopholes in controversial salary law

Employers in New York have begun looking for ways around a controversial law that will seek to remove one of the most frustrating parts of applying for jobs.

Employers in New York City will have to show a salary range on job listings from this week, as a law designed to increase transparency comes into effect.

The city is the latest place in the US to bring in laws surrounding pay transparency, a shift that is also gathering pace in Australia.

The law aims to end one of the most frustrating aspects of applying for jobs, but the prospect of difficult conversations have left employers looking for ways around it.

It would come into effect for all jobs advertised in New York City, as well as online roles that could conceivably be worked in the city, with fines in place for companies who fail to comply.

Brought in to combat gender pay gaps and empower workers to discuss salaries more openly, the law has been met with resistance by some companies who say it could make them more vulnerable to competitors or create disputes among workers.

New York City Mayor Eric Adams signed the legislation into law in May, which will come into effect on Tuesday. Photo: Dimitrios Kambouris/Getty Images

Some companies are preparing by hiring managers for difficult questions around pay from existing employees, while others are reportedly already seeking loopholes in the legislation.

The Wall Street Journal reported technology company Harri was anticipating disruption, with chief compliance officer Wendy Harkness saying its human resources staff had been given tip sheets on how to handle employees who may be upset about where their own salary sits in comparison to advertised ranges.

A key aspect of the law is that employers must include a “good faith” range of salaries they expect to pay for the role, without needing to include information about bonuses or other benefits.

There has been concern over the vague definition of “good faith” and the potential for companies to offer too broad a range of salaries.

For instance, a position for a tax services director at consulting firm PricewaterhouseCoopers posted a range of US$158,400 to US$434,000 ($247,300 to $677,600), with the potential for further bonuses.

PricewaterhouseCoopers offices in New York. Photo: Richard B. Levine/Zuma Press.

“Actual compensation within that range will be dependent upon the individual’s skills, experience, qualifications, and applicable laws,” the listing reportedly said.

Jacqueline M. Ebanks, executive director of the New York City Commission on Gender Equity, warned recruiting through third parties may allow employers to bypass the law altogether.

“It’s there and, as I was reading the guidance, I thought, ‘OK, here’s a loophole,’” she told a labour relations forum.

The law echoes those in place in Colorado, California, Maryland, Nevada, Rhode Island, Connecticut and Washington.

The requirement for the law to apply to remote roles already impacted job seekers in Colorado, however, when it was introduced in 2019.

A number of employers unwilling to publicly list salaries were offering remote work for anywhere within the US except for Colorado, the WSJ reported at the time.

Work reform coming for Australians

It comes as the Australian government looks to pass a slew of labour reforms that include making it illegal to prohibit employees from discussing their pay.

Further proposed reforms include giving employees more bargaining power to push for flexible working arrangements, less fixed-term contracts, and more emphasis on cracking down on sexual harassment and gender inequality.

Employment and Workplace Relations Minister Tony Burke has introduced pay transparency legislation that aims to tackle the gender pay gap. Photo: Martin Ollman/Getty Images.

Workplace Relations Minister Tony Burke said cracking down on pay secrecy clauses in contracts was key to promoting gender equality in the workforce.

“These clauses have long been used to conceal gender pay discrepancies,” he said.

“Banning them will improve transparency, reduce the risk of gender pay discrimination and empower women to ask their employers for pay rises.”

Originally published as NYC employers look for loopholes in controversial salary law