California and New York Leading a New Year of Pay Transparency

In an attempt to address concerns about pay inequity, California and New York rang in the new year by implementing laws that require employers to include information about compensation ranges in job postings, joining Washington, Colorado and Connecticut, which have already implemented similar pay transparency laws.

As of January 1, 2023, employers that have 15 or more employees and at least one employee residing in California are required to post pay scales for all job postings that could be filled in California. The California Labor Commissioner has interpreted this requirement to apply to positions that could be performed in-person or remotely within California. Further, even if the employer does not meet the 15-employee threshold, the new law requires employers to provide the pay range to any employee or applicant who requests the information. In each job posting, covered employers must include the base wage or salary range that they reasonably expect to pay for the position. If the employer has a set wage or salary that it pays for the position, then the posting can include just that set wage or salary. Failure to include the required information could result in civil fines of up to $10,000 per infraction. However, the statute provides employers with an opportunity to avoid fines by updating the job posting to include the pay range. The law is silent on how employers are meant to advertise for commission-based positions.

On December 21, 2022, New York Governor Kathy Hochul signed a bill that will also require new pay disclosure requirements in that state, effective as of September 17, 2023. The bill includes many similarities to a law that has been in effect in New York City since November 1, 2022. Both the state and city laws require employers to disclose minimum and maximum compensation information in internal and external job postings or promotion announcements for positions that can or will be performed in New York State or New York City. But the state law goes beyond the city law in that it also requires that a description of “a job position for such job, promotion or transfer opportunity, if [one] exists” be provided along with details of the salary range. Like the new California law, the new New York state law (and the existing New York City law) require compliance with the disclosure requirements for remote job postings that could be filed by a New York resident. The ranges included in job listings are made in good faith. For positions paid on a commission basis, employers can fulfill the requirements of the New York state law by stating in general language that the position is paid on a solely commission basis.

The California and New York laws also include recordkeeping requirements for the wage rate history of each employee and position at the employer. California requires employers to maintain records of the job title and wage rate history for each employee for the duration of the employee’s employment and for three years after the employment ends. New York requires employers to maintain records of the history of compensation ranges for each job, promotion, or transfer opportunity and the job descriptions for those positions, if such description exists.

These new requirements highlight the importance for New York and California employers, and for multi-state employers and employers that may rely on a remote workforce, to stay abreast of state-specific developments, including as they relate to internal and external job postings and pay disclosure obligations.

This information is provided by Vinson & Elkins LLP for educational and informational purposes only and is not intended, nor should it be construed, as legal advice.