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Salary Transparency Laws in Effect in New York City and Other State Localities; Statewide Compensation Disclosure Bill Awaits Governor's Signature

November 7, 2022

Salary Transparency Laws in Effect in New York City and Other State Localities; Statewide Compensation Disclosure Bill Awaits Governor's Signature

November 7, 2022

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Critically, the state bill parts from the New York City law in addressing the remote work environment and jobs that can be performed in a location outside of New York.

While New York State Senate Bill S9427A, passed on June 3, 2022, awaits delivery to New York Governor Kathy Hochul, salary transparency bills are now operative in New York City, Westchester and Ithaca. The amended New York City law (effective November 1, 2022), as well as pay disclosure laws recently passed in Westchester County (effective November 6, 2022) and Ithaca (effective September 1, 2022), each require covered employers to include good faith salary ranges in any job posting, including promotions and transfers. Moreover, on October 11, 2022, the Albany County Legislature also passed a similar law requiring employers to post the minimum and maximum salary or hourly wage for any job posting, promotion or transfer in Albany County. If the legislation is signed by the Albany County executive, it will take effect 90 days thereafter.

Similar in its general purpose to the New York localities’ salary transparency laws, SB S9427A would require most employers throughout New York to disclose compensation, or ranges of compensation, to both job applicants and current employees. The bill would apply to all new job advertisements as well as internal promotion and transfer postings. There are several differences, however, including the state bill’s requirement that employers include job position descriptions in covered job postings (should they already exist), along with a requirement that job postings for positions that will be paid solely based on commissions include a general statement so indicating. The bill passed in both the New York State Assembly and Senate, and remains slated to be sent to Governor Hochul for consideration and review. It would become law and go into effect 270 days after the governor signs the bill.

Scope, Requirements and Violation Enforcement Under Senate Bill S9427A

The wide-ranging bill defines “employer” in two ways: (i) any person, corporation, limited liability company, association, labor organization or entity employing four or more employees in any occupation, industry, trade, business or service, or any agent thereof; and (ii) any person, corporation, limited liability company, association or entity acting as an employment agent or recruiter, or otherwise connecting applicants with employers. The bill would not apply to temporary help firms, as such entities are already required to provide good faith compensation range information at the time of an initial interview or hire pursuant to the New York State Wage Theft Prevention Act.

The bill would require employers to calculate and disclose 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. Employers would also be required to keep and maintain pertinent records, including, but not limited to, the history of compensation ranges for each job, promotion or transfer opportunity and the job descriptions for such positions (if such descriptions exist).

The state bill would amend the New York Labor Law, rather than the New York State Human Rights Law. The state bill’s proposed anti-retaliation provision provides that “no employer shall refuse to interview, hire, promote, employ or otherwise retaliate against an applicant or current employee for exercising any rights” under the law. The state bill would be enforced through the Commissioner of Labor, who has authority to issue civil penalties (ranging from $1,000 for the first violation, $2,000 for the second violation and $3,000 for the third and subsequent violations) to employers in violation of the law and with whom employees or job applicants would be able to file complaints for alleged violations. In contrast, the New York City law was recently amended to limit the right to individual recourse to only current employees―not job applicants. New York City’s law is derived from the New York City Human Rights Law, under which uncured violations of the law, as well as subsequent violations, could result in civil penalties of up to $250,000. Another key difference between the New York City law and the state bill is the state bill’s lack of the no-fine, first-time violation penalty provided under the New York City law, which applies as long as employers submit proof that the violation is cured within 30 days of receiving the complaint and the New York City Commission on Human Rights accepts the proof of cure.

Implications for Businesses Employing Partly and Fully Remote Workers

Critically, the state bill parts from the New York City law in addressing the remote work environment and jobs that can be performed in a location outside of New York. Unlike the New York City law, the state bill uses “can or will” in defining covered positions, providing that advertisements for jobs “that can or will be performed, at least in part, in the State of New York” are covered by the bill. In contrast, the New York City law provides that advertisements for jobs that “cannot or will not be performed, at least in part, in the City of New York” are exempt from the law. As such, a covered New York employer that also has a Florida office and advertises for an in-person position to be filled in the Florida office will likely not have to comply with the New York City law for that position. However, job postings for a fully remote position, or a position with an expected periodic presence in New York City, are likely subject to the requirements of the New York City law, because the position would not be one that “cannot or will not be performed, at least in part, in the City of New York.”

As discussed in a prior Alert, linguistic differences between the New York City law and the state bill could create a potentially meaningful distinction, since the “can or will” state bill language is a permissive and arguably broader approach than the “cannot or will not” restrictive language of the New York City law. Thus, the state bill appears to cover all job, promotion and transfer advertisements, whether in-person or fully remote, including jobs performed completely outside of New York state. Westchester County’s law, by contrast, is explicit in limiting its application to remote work scenarios, providing that it applies to “positions that are required to be performed, in whole or in part, in Westchester Country, whether in an office, in the field, or remotely.” (Emphasis added.) As such, employers who employ workers outside of New York state and/or fully remotely, but who sell products, services or otherwise conduct business in New York state, should closely monitor the potential implications and any forthcoming guidance from the New York State Department of Labor, should Governor Hochul sign the bill into law. Notably, at least one business advocacy group is urging Governor Hochul to amend the bill to clarify that it would not apply to ads for remote jobs performed entirely outside of New York state.

Since the state bill explicitly provides that it shall not supersede or preempt any local law, rules or regulations, all pay transparency laws which have already been passed by counties (i.e., Westchester County), cities (i.e., New York City and Ithaca) and other localities in New York state will control, rather than the provisions of the state bill. The New York State Business Council has urged Governor Hochul to amend the bill to preempt local pay transparency orders, except for New York City’s.

Additional Considerations and Next Steps for New York State Employers

Across New York state, job applicants, current employees and even employers’ business competitors may soon gain access to employers’ pay practices and position compensation ranges. Indeed, employers could be faced with this new job posting transparency reality in less than nine months from now if Governor Hochul were to sign the state bill into law today. Should the bill become law, salary wars over in-demand roles and employers’ subsequent increasing of their pay ranges to attract talent are indeed likely possibilities. The domino effect of raising pay for new position openings might create a legal obligation to increase pay for current employees. Further, given the law’s posting requirement—current employees would be able to see competitors’ postings and compensation ranges, as well—employers should consider whether any pay adjustments or retention bonuses are warranted to retain employees through the frenzy. Employers would be wise to begin reviewing their pay practices and consider conducting a pay equity audit now, under attorney-client privilege where practicable.

Education of managers and those involved in performance management and compensation decisions is also critical, as pay transparency laws reinforce the importance of comprehensively documenting workplace realities, such as performance reviews and other factors that contribute to employee pay. Also important is the education and training of managers and other employees involved in the hiring process to ensure they understand this new state law, as well as others related to compensation (i.e., salary history inquiry limitations). Employers may find that lawful factors explain any pay differentials in their workforce. However, ensuring managers understand and comply with the New York City, Westchester and Ithaca laws now in place, the Albany law awaiting signature and the new statewide law prior to its enactment, as well as evaluation of current pay practices and job posting templates, are critical steps in maintaining a competitive business edge, retaining top employee talent and avoiding costly claims.

For More Information

If you have any questions about this Alert, please contact Eve I. Klein, Gregory Slotnick, any of the attorneys in our Employment, Labor, Benefits and Immigration Practice Group or the attorney in the firm with whom you are regularly in contact.

Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.