New York City will require companies to disclose salaries on job postings

It seems like almost everyone is looking for a new job. There are approximately 11 million jobs available. Every month, millions of Americans leave their jobs in search of better opportunities. One of the most important aspects of a new job is compensation. Until now, the overwhelming majority of companies conveniently omitted salary from their job postings.

Lost during the holiday season and the current rise of omicron, there was great news that was ignored. Under a new law passed by the New York City Council, which will take effect in April 2022 if not opposed by January 14, 2022, New York City employers will have to include the minimum starting wage and maximum for any “advertised job, promotion or transfer opportunity.”

This will be a complete game-changer and bode well for new job seekers and current employees. The bill lifts the curtain on wages, which have often been considered a deep, dark and hidden secret by corporate executives.

This unfair and one-sided way of doing business is detrimental to the person looking for a new job. A candidate would be required to interview more than three to six people over a period of up to six months. After the culmination of an arduous and emotionally draining interview process, an offer could fall well short of the eager candidate’s expectations. The ordeal was a complete waste of time and energy for everyone involved in the hiring process. The experience looks bad for the company. The discouraged job seeker will surely share this horror story on social media and with friends, which could make it harder for the company to recruit people in the future.

Even in this hot and tight job market, the interview process typically involves enduring rude behavior, last-minute interview cancellations, lack of feedback, ghosting, and receiving a lowball offer. When the new law comes into effect, things will be different. A person will have the opportunity to see the salary range and make an informed decision whether or not to pursue the role. There would be no more guesswork or wishing the money was there at the end of the interview ordeal, as the job seeker will have the pay range up front.

The bill, which passed by a vote of 41 to seven, states that employers who fail to list minimum and maximum salary ranges for New York-based positions are engaging in discriminatory practices. This bill applies to job advertisements in both the private and public sectors, as well as promotions and transfer opportunities.

Council member Helen Rosenthal said of the new law: “The lack of pay transparency is discriminatory and anti-worker. Rosenthal continued, “Every New Yorker should have the right to determine whether they will be able to support themselves and their families when applying for a job. It’s time to level the playing field and restore some dignity to New Yorkers looking for work.

There are already pay transparency laws in California and Colorado, and it’s likely with New York on board it will spread across the country.

In a fairly recent new law enacted by a number of states, it has been ordered that companies cannot ask a job seeker how much they earn and their salary history. Although it is not a law in all states, a significant number of companies, based in locations that do not legally require it, voluntarily adhere to this policy.

There will be positive – and some unintended – consequences resulting from this new rule. When recruiting, there is a term for the salary of a person who has worked for a long time in a company – the “loyalty reduction”. When the worker started 10 or 20 years ago, the salary was relatively low. With only 1% to 2% raises per year, coupled with inflation, the compensation of the loyal employee will be much lower than that of someone who changes jobs regularly and receives a 10% raise at 20% for each move. This creates a wide pay gap between workers. There can be great fear on the part of management that when salaries are posted online, internal employees will be shocked and appalled at how much less they earn than their peers. They’ll feel like they’ve been cheated on all these years, because new hires are paid far more than long-serving employees. Companies could be forced to rapidly raise salaries for current employees, in an effort to stem mass quits.

They say it’s taboo to publicly discuss sex, politics, religion and your salary. However, the bill opens the conversation to another burning issue. The next push could be to force companies to share employee salaries for the sake of openness and transparency. They will have a better understanding of what others are paid and where they stand.

Workers will say that by knowing the compensation of their colleagues and those of competing companies, it will empower them to take appropriate action to address their compensation. With little opacity and transparency, this leads to frustration, hurt feelings and the belief that they are being exploited or discriminated against.

We can see signs of blatant discriminatory compensation practices if and when salaries are disclosed for all to see. While it’s not illegal to share salary information with co-workers, companies typically pressure people to keep quiet about it. Employees feel left out. They don’t know whether they are grossly underpaid or fairly compensated.

The New York City bill is part of a growing employee-centric shift. Previously, many US states had instituted laws that prohibited companies from asking how much a person currently earns or about their salary history.

The laws were written, in large part, to help close the gender pay gap. This law greatly benefits a top candidate who earns considerably less than what is offered to her for a similar position at a competing company. It could also have big unintended consequences. Prior to the new law, before any interview, a hiring manager or human resources professional will ask the candidate how much they earn and demand proof of their earnings.

Now that the job seeker no longer has to disclose their salary, offers could well exceed this range. For example, if someone is in a job paying $100,000, but has the skills, experience, and background to take another job elsewhere paying $250,000, they will no longer be locked into their current salary.

These trends bode well for workers. In a hot and tough job market, we are likely to see a steady stream of positive new initiatives from politicians and businesses to improve the lives of employees. Some executives will embrace humanistic programs because it’s the right thing to do. There will be managers who will not be very happy with the changes, but will recognize that if they do not take good care of their employees, they will quit and join their competitors.

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