Pay equity and transparency in the workplace has been a growing focus of lawmakers and a societal concern, especially in recent years. Several state and local jurisdictions across the country have passed a number of laws aimed at closing the gender and race-based pay gaps that still exist in many industries. In particular, laws focused on pay transparency have been on the rise, with over a dozen state and local jurisdictions passing such laws in recent years.
Wage transparency laws generally require employers to disclose salary information to current or prospective employees under certain circumstances. However, these laws vary between jurisdictions as to where, when, how and to whom the required disclosures must be made, as well as the specific information that must be disclosed. For example, some laws require employers to include the appropriate salary or wage range in all posted job positions, while others mandate that employees and prospective employees be provided with a salary or wage range for their particular position. , either on demand or after a certain event. (ie when an offer is made). These new laws not only affect employers in the restaurant industry from a legal compliance perspective, but also from a business and recruiting perspective.
Most recently, on December 21, 2022, Governor Kathy Hochul signed New York State Senate Bill S9427A into law. This new law, which takes effect in September 2023, requires employers with four or more employees to include compensation or a range of compensation, as well as a job description, in every job posting, promotion or transfer opportunity if the job is available or will. be performed, at least in part, in the State of New York. Consequently, this law requires that information related to compensation and job duties be provided for all external and internal opportunities that are created and posted. These requirements are similar to those established under the New York City ordinance (which took effect in November 2022) and the Colorado law (which took effect in January 2021). In addition to wage disclosure requirements, employers should be aware of other requirements imposed by wage transparency laws, such as notice and record-keeping obligations.
Employers may face a variety of consequences for violations of wage transparency laws, including an investigation by their state’s Labor Commissioner, civil penalties, and/or a private right of action against the employer. Therefore, understanding all obligations under these laws is critical for employers. While laws passed by New York State, New York City and Colorado maintain some of the strongest requirements for employers to date, some states are considering implementing or revising pay transparency laws and may impose stricter requirements in the coming years. Interestingly, the trend with these laws is that all jobs are covered by the job posting disclosure requirement, if the job could be donein the respective state, which makes the extent of their field. For example, a restaurant posting for a job in New York should include this information in its regional or statewide posting.
As the restaurant industry continues to face a tight labor market, employers may be concerned about how these wage transparency laws will affect their business from an employee relations and recruiting perspective. On the one hand, employers may worry that they will be at a disadvantage in the hiring process because employees and potential competitors will have access to their salary information, which may affect an employer’s ability to negotiate salary. . On the other hand, job ads that include salary information can attract more and more qualified applicants. Including salary information up front is likely to save employers time during the hiring process, as applicants will be able to make a more informed decision about whether to apply. Further, employers will more easily be able to review the wages, and potentially the benefits, of their competitors to determine how to set wages competitively.
Such information can also serve as a tool to retain employees if they are able to compare their current situation with that of their peers and those working for a competitor. These laws may become more widespread as additional states consider their merits, so it is important that restaurants and employers in the hospitality industry have a strategic plan for taking advantage of such new compliance mandates.
As a result of these laws, employers must be aware of their legal obligations and understand the scope and coverage of such laws. Employers may wish to review and revise applicable hiring and employment documents, materials, procedures and processes to ensure compliance with relevant laws. Even employers not yet subject to any pay transparency laws may consider auditing their pay practices and establishing some salary guidelines or hourly pay ranges for positions within their organizations. This may include evaluating compensation policies and practices, related to starting compensation, merit increases, promotions, and incentive pay.
Employers will want to incorporate any changes in pay practices in a strategic manner, consistent with best practices and legal requirements in this area. Employers seeking advice on complying with and implementing pay transparency laws and/or best practices for their organization are encouraged to seek competent legal counsel.
Abby Warren and Kayla West are partners and associates, respectively, at the Robinson+Cole law firm.
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