New York state pay transparency law takes effect

Pay equality has been an important topic over the last few years, and the drive to correct the systemic suppression of wages for women and minority workers for decades has led to pay transparency laws in several states.  With no federal legislation on pay transparency in sight, employers are having to deal with a patchwork of laws that vary in application and scope, significantly complicating how they post job listings.

This month, New York joins eight other states in requiring employers to disclose to job applicants how much a position pays.  The New York State law, which takes effect Sept> 17, applies to employers with four or more employees and requires employers to include the minimum and maximum salary or hourly pay rate when advertising a job, a promotion or transfer opportunity.

The disclosure is required in two scenarios: (1) if the job will be performed, physically, at least in part in the state or (2) if the job, regardless of where performed, reports to a supervisor or site located in New York. Employers also must disclose job descriptions in the advertisement, assuming one exists.

The new law does not permit an applicant to file a private lawsuit.  Enforcement rests with the New York State Department of Labor, and an applicant must file a complaint with the NYDOL.  An employer that violates the laws is subject to civil fines: $1,000 for a first violation, $2,000 for a second violation, and $3,000 for any further violation.

New York is the ninth state to establish salary disclosure rules, joining California, Colorado, Connecticut, Maryland, Nevada, Rhode Island, Washington, and Illinois, where the law takes effect January 1, 2025.  At least a dozen other states are considering pay disclosure requirements.  Several cities, including New York City, also have enacted local ordinances requiring that pay be disclosed to job applicants.

There is some confusion over the reach of the new New York statute.  As originally passed, the statute would have applied to job postings that could be or would be performed, at least in part, in the state.  However, a subsequent amendment in the final law requires disclosures in job postings for positions that will be physically performed outside New York but that will report to a supervisor, office, or other worksite in New York. The change suggests that the job posting law may apply to sites where a New York employer has employees in physical operations outside New York (and not just employees working remotely who report to New York).

The current uncertainty over the scope of the posting requirement burdens employers with making a decision whether to post salary ranges for a job opening in a plant site outside New York where the plant reports to an office or manager in New York.  (New York City’s ordinance is written differently; it applies to positions that can or will be performed, at least in part, in New York City.)  The NYDOL, charged with drafting regulations to enforce the statute, may soon provide New York State employers clarity on this issue.

The specific requirements of each state law varies. For example, the New York statute and others require disclosure at the posting stage, while other laws require disclosure only if the applicant requests the information.

The pay disclosure law in Maryland applies to anyone engaged in business in Maryland. In California, the law applies to an employer with 15 or more employees overall but that has at least one employee in California.

The varying state requirements pose compliance challenges for companies with employees in different states.  And the increase of remote work for white-collar workers has made these compliance challenges even more daunting.

The statutes in California, Colorado, and Washington State require salary range disclosures in job postings, including postings for jobs that may be done remotely from any of those states.  If an employer advertises that a position is remote, the employer is effectively acknowledging that it is seeking candidates from any state. A risk-averse employer would likely comply with the California, Colorado and Washington law in posting remote positions.

Passage of pay transparency laws is one of many efforts that states have taken to address concerns about pay equality for women.  With action on new pay equity laws stalled at the federal level, states have stepped in the breach to address pay inequities in the workplace.  In addition to salary transparency laws, states have passed measures to prohibit employers from asking about an applicant’s salary history, have strengthened state equal pay laws, and, in California and Illinois, are requiring employers to report pay data to state agencies.

A U.S. Department of Labor report on compensation reveals that, on average, women earned 83 cents to every dollar paid to a man.  That gap increases for women of color.  According to the Labor Department study, Black women were paid 64 cents on the dollar, and Hispanic women were paid 57 cents on the dollar.

The DOL report, an effort between the Women’s Bureau and the Census Bureau, concluded that the majority of the pay gap between men and women could not be explained by factors such as age, education, industry, or work hours.

In all occupation groups, women’s wages were less than the wages paid to men.  Industries and occupations where women are concentrated pay less than industries and occupations where there are more men.  But the report found that even in jobs dominated by women, they were still paid less than men in the same job.

While the purpose of the pay transparency laws is to equalize compensation, their practical effect over an employer’s day-to-day operations is enormous.  New York employers, companies with multi-state operations, and employers with remote work forces must consider what laws apply to them and what they need to do, including:

• Determine which state and local salary transparency laws apply to their operations;

• Develop salary ranges for positions where none currently exist and keep up to date on market adjustments in compensation to attract and retain skilled and productive work force;

• Develop job descriptions to fully understand the duties and responsibilities and to help “price” jobs in the marketplace;

• Develop job posting templates;

• Ensure that job postings in all communication channels – whether it be the company website, job boards, or postings on social media sites – comply with the rules that apply.

While employers adapt to the patchwork of state laws, they must remain mindful of existing federal laws on pay enhanced enforcement initiatives by the Equal Employment Opportunity Commission and the Office of Federal Contract Compliance Programs. One of the six initiatives in the EEOC’s proposed strategic enforcement plan for 2023-2027 is “advancing equal pay for all workers.”   The EEOC also is considering reintroduction of a rule requiring private employers to submit pay data with their annual EEO-1 filings.

The OFCCP, which audits companies with federal contracts, has emphasized to the contractor community that it, too, makes pay equity a priority.  The OFCCP has collected hundreds of thousands of dollars in back pay over the last few years after alleging pay discrimination during compliance evaluations of major companies holding federal contracts.

Read more: Getting pay transparency right: Best practices and state comparisons

While the state initiatives are requiring employers to enhance procedures, the federal enforcement initiatives require employers to analyze their compensation policies and procedures for bias under federal discrimination laws.  As a result, many companies are conducting privileged and confidential pay equity audits directed by legal counsel to weigh their risks and fix problems quickly.

While the effects of pay transparency laws on traditionally marginalized workers is only beginning to be understood, it’s impact on employers is clear.  The increased compliance burden due to the disparate pay transparency rules from different states has created a difficult landscape for employers who are having to balance competing needs when looking to fill vacancies. With several new states in the process of enacting their own pay transparency laws, these challenges will only increase in the foreseeable future.

Jo Bennett is a partner in the Philadelphia offices of Culhane Meadows. Her practice focuses on labor & employment law.