New York Enacts Statewide Pay Transparency Law

On December 21, 2022, Governor Hochul signed Bill A10477/S9427A, New York’s first statewide pay transparency statute, into law. When the statute goes into effect on September 18, 2023, New York State will join a growing number of jurisdictions that have adopted pay transparency laws. The New York State pay transparency law (“Law”) requires employers to list compensation or compensation ranges and job descriptions for all advertised jobs, promotions, and transfer opportunities that can or will be performed in New York State, including positions that are fully remote. According to Governor Hochul, the Law seeks to “usher in a new era of transparency for New York’s workforce” and tackle “pervasive pay gaps for women and people of color.” The Law will not preempt or supersede its New York City counterpart or any other local pay transparency statutes.

Which Employers and Positions Are Covered by the Law?

The statewide Law applies to all employers with four or more employees, including corporations, limited liability companies, associations, and labor organizations. The definition of the term “employer” within the Law applies to entities acting as agents or recruiters but excludes temporary help firms. It is unclear whether this exclusion applies to temporary help firms generally (including as to their own recruiting for their own employees) or limited to instances in which they are acting as recruiters for other employers; perhaps this open question will be answered by guidance from the New York State Department of Labor (“NYSDOL”).

Employers must include the job description and compensation ranges in job postings all open positions, including those that may be filled through promotions or transfer of existing employees if the job can or will be performed, at least in part, in the State of New York. This means that even when advertising positions that are fully remote, employers must comply with the Law because the position could be filled by an applicant that is a New York resident.

What are Employers’ Obligations?

Employers covered by the Law are required to include the compensation or range of compensation and the job description for the job, promotion or transfer opportunity in the job advertisement. “Range of compensation” is defined as “the minimum and maximum annual salary or hourly range of compensation for a job, promotion, or transfer opportunity that the employer in good faith believes to be accurate at the time of the posting of an advertisement for such opportunity.” As a result of their unique pay structure, advertisements for commission-based positions are only required to include a general statement in writing that compensation shall be based on commission. The Law does not define “job description,” but employers are required to include one “if such job description exists,” likely meaning that employers will not be required to create job descriptions just for advertisements if none already exists.

The Law also includes a recordkeeping requirement which instructs covered employers to keep and maintain “necessary records” including, but not limited to, the history of compensation ranges and job descriptions for each job, promotion or transfer opportunity. The law does not include a timeframe for the recordkeeping requirement.

The Law protects both applicants and current employees by prohibiting employers from refusing to interview, hire, promote, employ, or otherwise retaliate against applicants and employees for exercising their rights under the Law. Employees claiming to be aggrieved by an employer’s violation of the Law are permitted to file a complaint with the New York State Commissioner of Labor (“Commissioner”).

Enforcement

While there is no private right of action created by the Law, violations may subject employers to a civil penalty of up to $1,000 for a first violation, up to $2,000 for a second violation and up to $3,000 for a third or subsequent violations. The NYSDOL will conduct a public awareness outreach campaign to inform employers of the provisions of the new Law, and the information will be made available on its website. Additionally, the Commissioner will promulgate rules and regulations to further clarify employer obligations under the Law.  Although the Law applies statewide, it will not supersede or preempt any local laws or regulations. Accordingly, New York employers located in jurisdictions with local pay transparency laws are still subject to their requirements. For example, New York City employers remain subject to the New York City pay transparency law that went into effect on November 1, 2022.

Comparison of New York State and New York City Pay Transparency Requirements

The New York State and New York City pay transparency laws share several similarities. Both apply to employers with four or more employees and cover remote positions that can be performed in the relevant jurisdiction. Like the New York City law, the statewide Law covers both external and internal postings but does not require employers to advertise jobs, promotions, or transfer opportunities. If an employer decides to advertise an opportunity, however, it must comply with the relevant pay transparency law(s). In short, employers who fill positions through a non-competitive process or through succession planning are not required to post the position they are filling.  Both laws require employers to include the minimum and maximum salary in job advertisements and rely on the good faith of employers regarding the accuracy of the posted salary ranges.

Conversely, the statutes differ in several important ways. First, unlike the New York City statute, the Law does not include advertisements for independent contractors or interns. Second, the Law requires employers to include both a compensation range and a job description in postings while the New York City statute only requires employers to include a salary range. Third, unlike its local counterpart, the New York State Law includes anti-retaliation protections for applicants and employees. Finally, the New York City law provides that aggrieved individuals may file a complaint with the New York City Commission on Human Rights and also provides a private right of action for current employees. In contrast, the Law provides no private right of action but instructs aggrieved applicants and employees to file a complaint with the Commissioner.  

Employer Takeaways

The NYSDOL will likely issue guidance in the coming months, but employers are advised to work with counsel to review compensation and posting practices for both internal and external job advertisements. The impending requirements underscore, again, the need for employers to conduct privileged pay equity analyses to identify and rectify any pay disparities. If one is not already in place, employers should establish a process for posting advertisements that ensures compliance with state and local laws, and train hiring managers and human resources personnel on the posting requirements.