New York State will now force companies to include salary ranges in job ads

New York will be the fourth U.S. state to require salary ranges with job postings when a new law signed Wednesday by Governor Kathy Hochul takes effect in September. This fall, one in every five people in the U.S. will live in a state with so-called pay transparency laws.

The law applies to all employers across New York with four or more workers, even for jobs only performed partly within the state. By September, job ads must include an annual or hourly salary amount or minimum and maximum range. A similar New York City law went into effect in November.

New York's salary law is part of a wave of requirements sweeping the U.S. as pressure grows to close a persistent wage gap between white men, women and people of color. As more states implement the rules, companies like Microsoft, Citigroup and Google are starting to list salary ranges nationally even when they aren't required to do so by law. And employment experts say workers are increasingly asking for the information.

Read more: Salary transparency laws create unexpected challenges for small businesses

Colorado already has its own requirements and California and Washington will add similar rules Jan. 1. The four states have a combined civilian workforce of about 36 million people, representing 22% of the U.S.'s 164 million civilian workers, according to U.S. Bureau of Labor Statistics data.

Job hunters in Connecticut, Maryland and Nevada also may request the information as part of the hiring process, but it's not required in job listings. Rhode Island will add that requirement Jan. 1. Jersey City, New Jersey, and Cincinnati and Toledo, Ohio, also have their own local job listing requirements. Including the more than 7 million workers in those states would mean that more than a quarter of U.S. workers fall under some manner of salary requirements for job listings next year.

The pay gap has been stuck at about 82 cents on the dollar for women compared to men for about a decade and the pay gap for Black and Hispanic women is even wider. In addition to the new salary requirements, many states are also banning companies from asking workers what they were paid at their previous employer and outlawing restrictions on employees telling co-workers what they are paid. Younger workers, who are often the lowest paid, have been more comfortable with pay transparency even as tenured workers may find the process uncomfortable.

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Some employers are using tactics to evade full transparency. When the rule was implemented in November in New York City, companies took down listings or posted ranges so wide they prompted complaints the information offered little context. If a job listed a range from, say, $173,300 to $359,000, it wasn't particularly useful, and a Bloomberg analysis of over 400 open roles found pay bands that regularly spanned more than $100,000.

More recent analysis from pay consultants and HR executives found employers advertising a lower subset of potential pay ranges, in part to tamp down on new hire costs and avoid upsetting existing workers who see new hired getting paid more than them.

Variations in state and city laws have also beguiled companies with workforces spread across different geographies. In New York and Colorado, companies must only post a "good faith" salary range for advertised jobs, which can be less than the full range. By contrast, Washington requires a full range that goes beyond estimates. Most regulators have agreed to forgo fines for first violations as long as employers make required changes.

National companies are "trying to come up with a practical approach, while complying with this patchwork of state and local requirements," said Joy Chin, co-leader of the Pay Equity Research group at employment law firm Jackson Lewis. "They are trying to comply with these regulations the best they can."