On December 21, 2022, Governor Kathy Hochul signed legislation establishing a statewide New York pay transparency law. When the law takes effect on September 17, 2023, it will require covered employers to list salary or wage ranges for all advertised jobs and promotions. Employers must also publish the job description if one exists.
These new pay transparency disclosures aim to empower workers with more information to reduce discriminatory wage and hiring practices. In particular, Gov. Hochul stated that this legal measure will provide a “critical tool in our efforts to end pervasive pay gaps for women and people of color.” It remains to be seen how much clarity the law will actually produce for workers at the expense of increased compliance responsibilities on employers.
The State law expands on pay disclosure requirements that took effect in New York City in 2022.
Covered Employers
The New York pay transparency requirements will apply to employers with four or more employees. However, there is a partial exception for staffing companies that place employees with various other organizations on a temporary basis.
The law also appears to impose compliance obligations on any “agents” of a covered employer who are responsible for advertising job openings.
Due to conflicting definitions of “employer” in the Labor Law, it’s unclear whether the New York pay transparency requirements will apply to public (i.e., governmental) employers.
Mandatory Disclosure Requirement
In advertising a “job, promotion, or transfer opportunity that can or will be performed, at least in part, in the state of New York,” a covered employer must include:
- the compensation or range of compensation for such job, promotion, or transfer opportunity; and
- the job description for such job, promotion, or transfer opportunity, if such description exists.
Where a position will be compensated solely on a commission basis, the employer can satisfy the compensation disclosure by generally stating that the compensation will be based on commissions.
The New York pay transparency law does not offer much additional clarification on these notice requirements. Instead, it directs the New York Commissioner of Labor to issue rules and regulations to advise employers further on the application of the law.
Recordkeeping
Under the law as originally enacted, employers must maintain records listing the history of compensation ranges for each job, promotion, or transfer opportunity and the job descriptions for such positions, if they exist.
Penalties
Applicants and employees can file a claim of noncompliance with the New York pay transparency law through the New York Department of Labor.
If the DOL finds a violation, it may impose civil penalties of:
- $1,000 for the first violation;
- $2,000 for the second violation; or
- $3,000 for the third or subsequent violation.
The law also prohibits employers from retaliating against individuals for exercising their rights under the New York pay transparency law.
Anticipated Amendments
In signing the new law, Governor Hochul’s approval memorandum indicated that she has “secured an agreement with the Legislature to make technical changes to the bill.” Specifically, she mentioned:
- Clarifying what qualifies as “advertising” a job;
- Excluding remote job opportunities performed entirely outside of New York without a connection to a New York office or supervisor; and
- Eliminating the previous record maintenance requirement for businesses.
On January 11, 2023, Senator Jessica Ramos (the lead sponsor of the original law) introduced a bill (S1326) including amendments based on this agreement with the Governor. As initially drafted, the amendments would:
- Explain that a job is only subject to the New York pay transparency law if it will physically be performed, at least in part, within the State, or will physically be performed outside of New York but reports to a supervisor, office, or other work site in New York;
- Define “advertise” to mean “to make available to a pool of potential applicants for internal or public viewing, including electronically, a written description of an employment opportunity;” and
- Eliminate the law’s specific recordkeeping requirements.
[Update: The amendments were passed by the Legislature and enacted by the Governor’s signature on March 3, 2023.]
Prepare Now
We expect to see both statutory amendments and additional guidance from the NY DOL before the New York pay transparency law takes effect. However, those may not be final until close to the September 2023 effective date. To ensure timely compliance, employers should begin planning in advance. Appropriate actions may include updating methods of determining compensation levels, auditing current compensation under applicable equal pay laws, evaluating recordkeeping protocols and procedures, and reviewing job descriptions. Likewise, employers should anticipate requests for salary reviews from current employees and consider their approach in response to such inquiries.
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