New York State Department of Labor Releases Proposed Regulations to State Pay Transparency Law

On September 13, 2023, the New York State Department of Labor released proposed regulations aimed at clarifying employer obligations under New York State’s pay transparency law (“Law”).  The Law, effective September 17, 2023, requires employers in New York State to disclose compensation or compensation ranges and existing job descriptions for all advertised jobs, promotions, and transfer opportunities. Crowell & Moring LLP previously reported on the Law, issued on December 21, 2022, and on its subsequent amendments, signed into law on March 3, 2023.

Applicability

Pay transparency obligations under the Law apply to “all advertisements for jobs, promotions, or transfer opportunities . . . that will physically be performed, at least in part, in” New York State. This includes opportunities that are “physically performed outside of” the State but report to a supervisor, office, or work site in the State. The proposed regulations specify that opportunities considered to be “physically performed outside of” the State include those where prospective applicants will work remotely, telecommute, or work from home. “Incidental or infrequent instances” of physical presence in New York State for work-related purposes, such as meetings or conferences alone, however, would be insufficient to establish that an opportunity is “physically performed, at least in part” in the State. Neither does “mere communication” with employees based in New York State constitute such physical performance.

Temporary help firms are excluded from coverage as defined in the Law. But the proposed regulations would clarify that this exclusion is limited to their recruitment of applicants in order to work to support or supplement the workforce of other organizations. The Law would apply “to temporary help firms for opportunities to work for the temporary help firm itself.”

Advertisements

Examples of advertisements include, but are not limited to, a newspaper advertisement, printed flyer, social media post, e-mail sent to a pool of applicants, e-communication sent using an electronic mailing list, or advertisement posted through any other medium. The proposed regulations also clarify that employers are permitted to hire, promote, or transfer employees without creating or posting an advertisement. Employers that elect to advertise opportunities would not be required to use any specific medium for posting advertisements. Regardless of the chosen medium, posted advertisements must contain a job description if one exists. For example, a job description “may not exist in the limited circumstance where the name of the position or title clearly conveys the full extent of the duties required of the position without additional detail,” such as “dishwasher.”

Range of Compensation

Advertisements must also include the “range of compensation” for an opportunity, which is defined under the proposed regulations to solely mean “the base rate of pay, regardless of the frequency of payment.” The “range of compensation” does not include other forms of compensation or benefits such as employer-provided insurance, paid or unpaid time off, sick leave, the availability of or contribution towards employer-sponsored retirement or savings plans, severance pay, overtime pay, or “other forms of compensation such as commissions, tips, bonuses, stocks, or the value of employer-provided meals or lodging.” While other forms of compensation or benefit information need not be posted, employers would be able to choose to provide “additional relevant compensation or benefit information beyond the requirements” of the Law. Employers will be prohibited, however, from including other forms of compensation, such as tips, in the range of compensation itself because the range provided would thereby fail to disclose the base rate of pay. While the Law requires that advertisements include a “range of compensation,” the proposed regulations provide that employers with “no flexibility” in the rate of pay may simply state that rate.

The Law states that the range of compensation must include the “minimum and maximum annual salary, or hourly rate, for an opportunity that the employer believes in good faith to be accurate at the time of” its posting.  The proposed regulations further define “good faith” as “the range of compensation the employer legitimately believes they are willing to pay the successful applicant or employee at the time they post an advertisement.” An employer can demonstrate “good faith” by considering factors such as the job market, current employee compensation levels, hiring budget and acceptable experience and education levels. The proposed regulations would not preclude employers from adjusting the range of compensation if needed, based on information gained through the hiring process.

Employer Takeaways

Employers and other interested parties have sixty days to comment on the proposed regulations, ending on the following Monday, November 13, 2023. Now that the Law is in effect, covered employers should ensure that their compensation and posting practices for internal and external job advertisements, including advertisements for remote or telework positions reporting to supervisors, managers, or work sites based in New York State, are compliant.  While the proposed regulations are subject to change before becoming effective, they provide insight into the view of the New York State Department of Labor on the Law.