What’s a Reasonable Pay Range? Employers Finding Out Under NYC’s Pay Transparency Law

Recent enforcement actions against employers under New York City’s pay transparency law shed light on what a “reasonable” pay range in job postings looks like. 

Why it matters: Job postings with pay ranges that are considered too broad but vary by less than $100k in some cases, will result in heavy fines assessed per job posting. 

The big picture: As pay transparency laws continue to proliferate across the country, understanding the limits of a compliant, “reasonable” pay range becomes increasingly critical. 

The law: New York City’s pay transparency law, which went into effect at the end of 2022, requires employers to provide “reasonable” salary ranges in job postings that the employer “legitimately believes they are willing to pay.” New York City is one of a growing number of jurisdictions with similar requirements. 

What is a “reasonable” pay range? The law and subsequent “clarifying” rules provide little guidance for employers on what constitutes a “reasonable” pay range or, perhaps more importantly, what makes a pay range unreasonable and, therefore, unlawful.

 Enforcement, however, has begun to provide a clearer picture, with the following ranges flagged under the law:

• $50,000 to $180,000
• $40,000 to $160,000
• $18 to $48 per hour
• $150,00 to $225,000

Tighter ranges needed: As the last example shows, a $75k range which may be reasonable to employers, might be found unlawful. A cursory search of top jobs on Indeed.com, for example, shows several listings with gaps in the same ballpark yet the employer was tagged out under the NYC law. 

Takeaways for employers: 

• Tailor salary ranges narrowly to ensure maximum compliance with pay transparency laws. 
  
  
• For larger ranges, be ready to provide context as to why that range reflects a “legitimate belief” of willingness to pay. 
  
  
• These laws are not going away – Virginia, New Jersey, and South Carolina are just a few of several states that will consider pay transparency legislation this year. Meanwhile, the Biden administration proposed a pay transparency rule for federal contractors earlier this year, and full federal legislation may not be too far off. Employers should begin preparing to adjust their compensation and recruiting strategies accordingly.