Pay Transparency Laws Are All The Rage: Looks Like New York State Is Joining the Party

Pay transparency laws are catching fire in legislative bodies around the country.  As we have previously reported, these laws, which target pay equity, have gone into effect in a number of jurisdictions, such as Colorado and New York City in recent years. 

New York State is one of the latest to pass such a bill (on June 2, 2022) that requires private employers in the state to publish salary or wage ranges in all job postings.  The bill, which has been passed by the state legislature and awaits the signature of Governor Kathy Hochul, will become effective 270 days after it is signed. 

With the bill effectively applying to very small businesses (i.e., employers with four or more employees), companies have reportedly asked Governor Hochul not to sign the bill into law without first limiting its application to larger businesses.

In the meantime, here is what employers need to know about the law:

• It applies to employers with four or more employees, which means only the smallest of employers do not have to comply (as well as temporary staffing firms, which are also excluded).
• It applies to any advertising for any “job, promotion, or transfer opportunity” that “can or will be performed, at least in part, in the State of New York.”
• Postings must contain:
  • Either the actual compensation, or a range of compensation, for the opportunity;
  • A job description (if a description exists); and
  • A general description of other types of compensation offered, e.g., fringe benefits, bonuses, stock options, or commissions.
• Range of compensation will mean the minimum and maximum annual salary or hourly range of compensation for the opportunity that the employer in “good faith” believes to be accurate at the time of posting.
• Postings for any opportunity paid solely on a commission basis will comply with the law provided it contains a general statement that compensation will be based on commission.
• It requires employers to keep records needed to comply with the law, which may include the history of compensation ranges and any job description for each opportunity.
• It includes anti-retaliation prohibitions protecting applicants or employees who for exercising any rights under the law.
• For violations, employers are subject to civil penalties of up to $3,000; aggrieved employees have no private right of action but can file a complaint with the New York Commissioner of Labor.

The state law is similar to the New York City pay transparency law currently scheduled to go into effect on November 1, 2022. Still, it includes some additional items, including the recordkeeping requirements and the need to include a job description in a posting (if it already exists, i.e., it does not have to be created for posting purposes).

Notably, because the state law (like the city law) applies to any job that can OR will be performed in New York, it appears to cover any posting for remote work, even outside of New York because the job could be given to an applicant who resides in New York. 

As a result, the law could have an impact on an employer that does not otherwise have an office or other physical presence in New York. It may seem a legal and practical stretch that this New York state law would have any real impact on an employer that has no physical presence in New York state.  However, those companies that sell their products or services in New York, or employ any New York-based employees (remote or brick and mortar) should take heed of this law. 

With the massive shift to remote work during and after the COVID-19 pandemic, many businesses have become multi-jurisdictional employers, often in ways that they may not recognize, especially when a remote worker lives or moves to a state where the employer has no other connection.  Employers with remote workers need to understand and apply various and often differing state laws that impact complex policies and practices, including, for example, paid leave time, sick/safe time leave, restrictive covenants, and, ever increasingly, pay transparency. 

These pay transparency laws come in a variety of shapes and sizes.  Other jurisdictions already have pay transparency laws on the books that are similar to the New York State and city laws (see, e.g., Washington, Colorado, and Jersey City (NJ)). Elsewhere, there are laws that require employers to disclose pay ranges, not on postings, but during the hiring process (see, e.g., Connecticut, Nevada) or to applicants on request (see, e.g., Maryland, Connecticut, and California). 

Going forward, employers should expect to (and will) see more of these laws come into effect in other states and localities (including Rhode Island in 2023, and Ithaca, New York, in September 2022). As for New York state, assuming that Governor Hochul were to sign the bill into law in the near future, it would not become effective until mid-April, 2023. 

While that would seem to give plenty of time for New York employers to prepare for any change, there is a good chance that long before then, they will have come up against a similar law already in effect in another state or municipality. Thus, it seems that it is never too late for New York and multi-state employers to begin to:

• Review pay levels, policies, and practices.
• Review and change posting practices (as needed) for new hires, transfers, and promotions.
• Review and change job descriptions (as needed) for use in postings.
• Review requirements with managers and administrative personnel who may need to understand them and their impact.
• Conduct a pay equity audit – a process that might naturally coincide with an assessment of compensation ranges for posting purposes.

Whatever you do, keep your eyes and ears open for new pay transparency law developments, which are likely to occur quickly and anywhere, including in places that an employer may wrongly assume is irrelevant.