NEW YORK – Starting this week, job seekers in New York City will have access to a key piece of information: how much money they can expect to make for an advertised opening.
Similar pay transparency laws have been adopted by a small but growing number of cities and states across the country in an effort to address pay gaps for women and people of color.
Seher Khawaja, a senior attorney for economic empowerment at Legal Momentum whose organization helped draft the New York City law, said salary transparency “gives employees and existing employees information to gauge how their position in the workplace is valued and whether they are being paid fairly.”
It also gives employers a way to avoid liability.
“They are putting their feet to the fire to think about how they set salaries and avoid discriminatory practices that have been used before,” Khawaja said.
Haris Silic, vice president at Artisan Talent, a staffing agency that places hundreds of creative professionals in New York City and around the country, said the law’s implementation was initially difficult on the employer side, but he thinks “everyone sees the value.”
“Every employer is an employee once,” he said.
Business groups, including the five borough chambers of commerce in New York, said the law could create “labor shortages and demands to adjust existing wage scales that employers cannot afford.”
“During labor shortages, or in the context of achieving employment goals, the maximum posted may be significantly higher than the historical salary range,” group write in a letter to the New York City Council.
Colorado was the first to adopt a salary transparency law in 2019, followed by California, Maryland, Nevada, Rhode Island, Connecticut, and Washington, as well as cities such as Cincinnati and Toledo, Ohio.
Rules for salary disclosure vary. In some cases, they require employers to share information upon request or after an interview, with exceptions for small businesses. In other cases, the employer must install a salary range.
New York City’s law is similar to Colorado’s but only applies to employers who have four or more employees than the entire business. That’s a third of the city’s employers but about 90% of the workers, according to state Labor Department statistics.
The new wave of legislation marks a shift in who bears the responsibility to make salaries transparent, and more employers are now responsible for creating an open work environment than allowing employees to know how their salary compares to their colleagues and whether to ask for fair compensation, according to Andrea Johnson , director of state policy at the National Women’s Law Center.
Mary Ramsay, 55, a Syracuse, New York-based health educator looking for a higher-paying job, said she hopes New York City’s salary transparency law will soon apply statewide, something that is now being considered by member of parliament
“Hiring people should be seen as a two-way contract,” he says. “You’re looking for a good partner.”
In September, California Governor Gavin Newsom signed a law requiring employers with at least 15 employees to publish their pay scales and job listings. The law also goes further than Colorado and New York by requiring large employers to submit annual reports to the California Department of Civil Rights that break down wages by race, ethnicity, and sex.
In 2021, the median salary for full-time female workers will be about 83% of that of men, according to federal data, and women make less than their male counterparts in nearly all fields. For women of color, the numbers are even worse.
A report by National Partnership for Women and Families found that Black women make 64 cents for every dollar paid to white, non-Hispanic men. For Latina women, it is 54 cents and for Native American women, it is only 51 cents.
Khawaja said the disclosure of demographic information is a refreshing addition to the California law, noting that one of the most important reasons for persistent wage inequality is the segregation of jobs by gender and race. As long as women and people of color disproportionately work in lower-wage industries, the pay gap will exist, she added.
“A disproportionate number of women work in menial jobs,” Khawaja said. “So legislation to increase the minimum wage and eliminate exceptions, such as tipped wages for certain categories of workers such as restaurant workers, is really important to close that gap.”
Here are some things to know about salary transparency:
Discussing Salary with Co-workers is legal
Johnson stressed that it is perfectly legal to talk about salary at work even if employers discourage it.
“The National Labor Relations Protection Act protects employees who discuss salary because it protects employees who discuss workplace conditions, and salary is a working condition,” he said.
The lack of transparency around pay typically hurts women and people of color — the same groups that are statistically less likely to negotiate, Johnson added.
THAT’S A LOT OF SALARY HISTORY
Don’t feel compelled to share your salary history with potential employers. In fact, some cities and states have passed laws that prohibit employers from even asking, a practice that can drive down wages and lock in inequality.
“There is a fundamental information asymmetry in wage negotiations,” said Kate Bahn, chief economist at the Washington Center for Equitable Growth. “Employers inherently have better information about wages, meaning they have the upper hand. The party with more information will do better.”
SAME AS SALARY EXPECTATIONS
Some employers get around the legal constraints of salary history by asking applicants to share their salary expectations, but Bahn said that can have the same effect of lowering offers.
That’s why Laura Adler, an assistant professor of organizational behavior at the Yale School of Management, says it’s better to have salary transparency laws that require employers to disclose salary ranges — like those in New York, Colorado, and California. Such laws make it more difficult for employers to circumvent the rules.
“The more policy makers can make their intervention in the way companies actually run their business, the more effective the intervention will be,” he said.
When negotiating for a new job, know that you have the right to refuse to share salary expectations so that the employer opens the offer, advocates advise.