Employers, It’s Happening! New York State Enacts Pay Transparency Law

On December 21, 2022, Governor Kathy Hochul signed Senate Bill S9427A (the NY Law), which requires covered employers to include salary or wage range—and the job description—in job postings.  The NY Law will go into effect on September 17, 2023.  New York joins a growing trend of wage transparency efforts by a number of states, counties and cities as a way to close the wage gap for women and workers of color.  With New York, approximately 20 percent of the American population will live or work in a state requiring pay transparency.

What Employers Must Comply?

The NY Law applies to all employers, and their agents (such as an employment agency or recruiters), that have four or more employees, regardless of their location, so long as the employer has at least one employee working in the State of New York.

The law does not apply to job advertisements from temporary help firms but does apply to employment recruiters or agents.

When Must Employers Provide Salary Ranges and Job Descriptions?

Covered positions include any external job advertisements, but also internal promotions or transfer opportunities that can or will be performed, at least or in part, in the State of New York.  Therefore, the NY Law would cover postings for remote and/or hybrid positions.

What Must Be Disclosed?

Under the NY Law, covered employers must disclose the following on the postings:

  1. the fixed pay rate or salary, the minimum and maximum annual salary range, or the hourly range of compensation they believe “in good faith” they would be willing to pay for a position “at the time of posting”; and
  2. the job description for the position if such description exists.

If the position is paid solely by commissions, the employer must disclose the job description, if any, and include a statement that the position is paid solely by commissions.

Are There Any Record-Keeping Obligations?

Employers must maintain records of their compliance with the NY Law, including history of compensation ranges, job postings, and job descriptions (if they exist).  The NY Law is silent on how long employers must maintain such records.

What are the Penalties?

The NY Law does not provide a private right of action for employees.  However, employees may file complaints with the New York State Department of Labor.  The NY Law also prohibits employers from retaliating against applicants or employees (i.e., refusing to interview, hire, or promote) who exercise any rights under the NY Law, e.g., asking for a posted position’s range of compensation.  Violations can result in civil fines of $1,000 for the first violation, $2,000 for the second, and $3,000 for the third and beyond.

How Does the NY Law Impact Other Salary Range Laws Already in Effect in New York?

The NY Law does not supersede or preempt any local law, rule, or regulation including the New York City, Ithaca or Westchester County transparency laws.

What Should Employers Do Now?

Employers have recently seen a flurry of similar laws enacted throughout the country, including in California.  The NY Law goes further than the NYC law as it requires employers to also provide job descriptions.

Employers should review salary ranges for each job classification to be in compliance with the NY Law when it becomes effective.  Job descriptions should also be regularly updated.  Privileged pay equity audits are highly recommended as an effective means to ensure that similarly situated employees are paid fairly and to establish appropriate salary ranges before advertisements are posted.  Also, it is essential to confirm what legitimate factors are driving compensation decisions, as employers should expect questions from existing employees regarding explanations for their pay based on review of advertised salary ranges relevant to their current positions.

The audit process can also highlight where additional policy updates are useful given developments in pay equity law.  As always, documentation of appropriate and legitimate factors for hiring, promotion, transfer, and related compensation decisions is key.  Updated training is also important given the fast-paced changes in the law, from bans on consideration of prior salary history in compensation decisions to ever-expanding obligations to publicly disclose salary information.

Employers should reach out to Faegre Drinker’s Pay Equity Team for counseling and assistance in this ever-changing legal landscape.

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