New York City Human Rights Law Could Impact Pay Equity Efforts

Employers should note that New York City’s amended Human Rights Law has expanded employee protections to include freelancers and independent contractors effective January 1, 2020.

The requirement comes from New York City’s Human Rights Law (NYCHRL), which was recently amended to expand employee protections to freelancers and independent contractors. For example, the law states that employers are prohibited from discriminating on the basis of race, color, creed, age, national origin, alienage or citizenship status, gender, gender identity, sexual orientation, disability, marital status, and partnership status. Amongst other protections, the law also prohibits sexual discrimination.

Another big component of the law is how it is applied across organizations. The law states that an employer only needs to employ at least four employees to be considered an employer and for the NYCHRL to apply to them. Independent contractors will count towards the employee total count as well.

There are a number of violations associated with failing to comply with the NYCHRL, including civil penalties up to 250,000, backwages, punitive damages and legal fees. The biggest concern for employers, however, is how the amended law creates challenges for employers working towards achieving equal pay.

If employers want to avoid the challenges of correctly identifying compensation risk areas and avoiding potential pay equity issues, they should undergo a comprehensive pay equity audit.

A pay equity audit can identify pay differences between employees that cannot be explained due to job-related factors. This type of audit not only identifies problems, but also provides actionable solutions. It gives employers an opportunity to ensure fairness in pay and prevent employee issues. It allows the employer to minimize risk by identifying and remediating deficiencies, providing the employer with greater standing to defend against and win claims of discrimination.

New York City’s move to expand employee protection laws to include freelancers and independent contractors is becoming a trend across the United States. Already, California passed AB 5, which requires employers to reclassify independent contractors as employees if they meet the “ABC Test.” More states and localities are likely to jump on board.

Employers, now is the time to undergo a pay equity audit.