Seyfarth Synopsis: New York State's law on pay transparency in job advertisements went into effect on September 17, 2023. A few days before the law's effective date, the state's Department of Labor published proposed rule making that would clarify key points of the law, while also leaving some questions unanswered. Public comment on the proposed regulations will be received until November 12, 2023.
Overview of New York State Law
On March 3, 2023, New York State amended its pay transparency law.1 Following the amendment, and effective September 17, 2023, New York State employers that advertise a job, promotion, or transfer opportunity must include in the advertisement: (1) the compensation or a range of compensation; and (2) the job description, if such description exists. The law applies to advertisements for a job, promotion, or transfer opportunity that will physically be performed, at least in part, in the state of New York, including those opportunities that will physically be performed outside of New York but reporting to a supervisor, office, or other work site in New York. To "advertise" means "to make available to a pool of potential applicants for internal or public viewing, including electronically, a written description of an employment opportunity."
Under the law, "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." For roles paid solely on a commission basis, employers should instead provide a general statement that compensation will be commission-based.
In addition to the disclosure requirements, the law contains an explicit non-retaliation provision.
Proposed Rule Making
On September 13, 2023, just four days before the law's effective date, the New York State Department of Labor published proposed regulations on the state's pay transparency law. Below are the key points addressed in the proposal.
1. While opportunities outside of New York that will report to a supervisor, office, or other work site in New York are covered, those with an infrequent physical presence or communications with employees in New York alone will not provide the nexus needed to be deemed physically performing work "in part" in New York.
As noted above, the New York law applies to advertisements for a job, promotion, or transfer opportunity that will physically be performed, at least in part, in the state of New York, including a job, promotion, or transfer opportunity that will physically be performed outside of New York but reports to a supervisor, office, or other work site in New York. (emphasis added).
The proposed regulations clarify that advertisements for opportunities that may be performed remotely from anywhere are covered so long as the employee would report to a supervisor or work location in New York. This nuance suggests that work that can be performed remotely from anywhere (including New York) but which will not report to a supervisor, office, or work site in New York are excluded from the pay transparency obligations.
In addition, the proposed regulations clarify that occasional meetings or merely communicating with employees in New York will not alone be deemed physically performing a job "in part" in New York.
2. The law is not applicable to temporary help firms hiring employees to work for other organizations, but does apply when a temporary help firm is hiring employees to work at the temporary help firm itself.
The New York law explicitly excludes "temporary help firms," as defined by New York Labor Law Section 916(5), since such firms are already required to provide wage range information in compliance with the New York State Wage Theft Prevention Act. However, the proposed regulations clarify that while the law does not apply when a temporary help firm hires employees to perform work or services for other organizations, the law does apply to temporary help firms for opportunities to work for the temporary help firm itself.
3. Advertisements are covered regardless of medium, so long as they are sent to a "pool of applicants," which means more than one potential or prospective applicant; and employers are responsible for advertisements posted through third-parties.
As noted above, to "advertise" means "to make available to a pool of potential applicants for internal or public viewing, including electronically, a written description of an employment opportunity." The proposed regulations clarify that advertisements are covered regardless of the medium in which they are posted, including, but not limited to, "a newspaper advertisement, a printed flyer that is either distributed or displayed, a social media post, an e-mail sent to a pool of applicants, an e-communication sent using an electronic mailing list, or an advertisement posted through any other medium." The proposed regulations would further define "pool of applicants" as meaning "more than one potential or prospective applicant."
The proposed regulations also clarify that employers are responsible for complying with the law, regardless of whether an advertisement is posted by the employer directly or through a third-party, such as a third-party recruiter or a job listing website. However, employers will not be responsible for advertisements that are "scraped" or automatically aggregated electronically and posted by a third-party without their knowledge or consent.
4. A pay range solely means the base rate of pay, and must be for a single opportunity and single geographic location or region.
The proposed regulations state that the range of compensation to be posted is solely the base rate of pay, regardless of the frequency of payment. The compensation range does not include other forms of compensation or benefits offered in connection with the opportunity, although an employer may choose to provide additional relevant compensation or benefit information beyond the requirements of the law.
The pay range must be for a single opportunity and single geographic location or region. This approach may be challenging for those employers that are using a broader national range to cover the geographic differences in various locations. We note, however, that this concern is somewhat mitigated because the law applies only to the jobs that are to be physically performed in New York (or performed remotely but reporting to a supervisor, office, or work site in New York).
In addition, the proposed regulations clarify that postings that cover multiple positions, including those with multiple levels of seniority or supervisory authority, would require the compensation range for each opportunity, resulting in a posting with multiple pay ranges. Again, this may prove problematic for employers that use a single advertisement to cover multi-level job openings.
5. The proposed guidance seemingly restricts an employer's use of a hyperlink to provide the compensation range.
The proposed regulations state, "[w]here the range of compensation information is extensive such that it will not fit in the space allotted for the advertisement, the employer is permitted to provide such information in a separate attachment or addendum, provided that the attachment or addendum is available free of charge, easily accessible to the prospective applicant, and the main body of the advertisement clearly and conspicuously states where the range of compensation information is available." This guidance suggests that employers may only use a hyperlink or a separate reference source if there is a space limitation issue for the compensation disclosure.
6. Posting a compensation range in "good faith" means 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.
Posting a range in "good faith" means 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. The proposal is welcome news for employers who may find themselves in situations where they need the flexibility to adjust the salary range before the time of hire. The proposed regulations contain illustrative examples to clarify this guidance, including paying more than expected to recruit an applicant with qualifications that exceed the posted qualifications. One example that would demonstrate "bad faith" are excessively broad compensation ranges with no explanatory information regarding the breadth of the range that essentially prevent the applicant from understanding the legitimate range that the employer is willing to pay for the opportunity.
7. The level of detail required for a "job description" remains unclear.
The proposed regulations do not specify the level of detail necessary to meet the requirement that advertisements include a "job description." There is some language, however, which suggests that the job description should meaningfully convey the required duties. Specifically, the proposed regulations clarify that 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." The proposed regulations use the example of a posting for a "dishwasher" who will be "solely washing dishes" as an illustrative example of when a detailed job description may not be available.
8. Who constitutes a "supervisor" is still unclear.
The proposed regulations do not provide any further clarification as to who may be considered a "supervisor" under the law, and specifically whether the term "supervisor" is limited to the candidate's anticipated direct supervisor. This is key to determining whether a position that will be physically performed outside of New York may report to a supervisor in New York such that an advertisement for that position would be subject to the law.
Next Steps for Employers
New York State's pay transparency law went into effect on September 17, 2023. As such, employers should review their job advertisements to ensure they are in compliance with the new requirements, update their procedures and implement training for hiring managers, talent acquisition professionals, and human resources employees on the requirements of the law.
With respect to the proposed regulations, they are not yet final. There will be a 60-day comment period during which employers and other stakeholders can provide comments. The comment period will end on November 12, 2023.
As always, Seyfarth's Pay Equity Group is available to assist employers in navigating these new requirements and ensuring that they are ready for the ongoing trend toward greater pay transparency generally, including developing protocols for nationwide compliance.
1 Seyfarth's Legal Update on the initially passed law is available here.
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