Just days before New York State's pay transparency law went into effect, the state labor department unveiled new proposed regulations that seek to clarify employers' obligations under the new law.
- The New York State labor department published proposed regulations clarifying the new pay transparency law requiring employers to disclose pay ranges in job postings.
- The sixty-day comment period expires on November 12, 2023.
On September 13, 2023, the New York State Department of Labor published proposed regulations in the New York State Register regarding the applicability of the pay range disclosure obligations on job, promotion, or transfer opportunities outside the state, requirements on the pay ranges that must be disclosed, and other provisions of the new pay transparency law.
Meanwhile, the pay transparency law, which Governor Kathy Hochul signed in December 2022 and which was subsequently amended in March 2023, went into effect on September 17, 2023. Specifically, the law will require employers in New York with four or more employees to disclose pay or compensation ranges in advertisements for job, promotion, or transfer opportunities.
Applicability to Employees Outside of the State
The pay disclosure obligations in the law apply to advertisements for job, promotion, or transfer opportunities that "will physically be performed" in the state (emphasis added) or "that will physically be performed outside the state of New York" but "report to a supervisor, office, or other work site in the state of New York."
The proposed regulations would clarify that to "physically be performed outside" of the state includes opportunities where a prospective candidate would be "working remotely, telecommuting, or working from 'home'" in another state. Thus, the proposed regulations seemingly affirm the interpretation that employer pay disclosure obligations apply to positions that could be filled remotely out of the state but where the remote employee would report to an office in New York. At the same time, the proposed regulations state that "[i]ncidental or infrequent" visits to New York for work-related purposes, such as "for an occasional meeting or conference" would not alone be sufficient for the opportunity to be considered "physically" performed in the state. Additionally, "mere communication with employees based" in New York alone would not mean a job is "physically" performed in the state.
Temporary Help Firms
By its terms, the pay transparency law will not apply to temporary help firms as defined by New York labor law. However, the proposed regulations clarify that while the pay disclosure requirements do not apply to temporary help firms in hiring temporary workers for other businesses or organizations, the requirements would apply to temporary help firms when they advertise "opportunities to work for the temporary help firm itself." For example, a temporary help firm would have pay disclosure obligations in an advertisement to fill an administrative assistant position at the firm.
Advertisements for a Job, Promotion, or Transfer Opportunity
The proposed regulations clarify that the pay transparency law does not require employers to advertise job, promotion, or transfer opportunities or to advertise opportunities in any specific medium. Yet, under the proposed regulations, if an employer does advertise the opportunity, the pay range disclosure obligations would apply "regardless of the medium in which they are posted," including but not limited to newspaper advertisements, printed flyers, a social media post, or an email to a pool of potential applicants.
The proposed regulations clarify that a job description would not be required in an advertisement if such a description does not exist. Additionally, the proposed regulations specify that in situations where an employer lists a job opportunity to cover multiple geographic locations or the listing is for an opportunity with differing levels of seniority, the employer would be required to provide "multiple ranges of compensation for each individual opportunity."
Compensation Range Refers to Base Rate of Pay
The proposed regulations provide specifics on what would or would not be required to be included in the disclosed compensation range under the pay transparency law. According to the proposed regulations, employers would be required to disclose the "base rate of pay, regardless of the frequency of payment," such as "an annual salary, an hourly wage, or a piece rate." The compensation range would not include other benefits that may be offered in connection with the opportunity, such as health or life insurance, paid time off or vacation days, sick leave, retirement or savings plan contributions, severance pay, overtime pay, or "other forms of compensation such as commissions, tips, bonuses, stocks, or the value of employer-provided meals or lodging."
Regardless, the proposed regulations state that employers would be allowed to provide "additional relevant compensation or benefit information beyond the requirements" (e.g., "$18 an hour plus tips" or "$18 an hour plus an estimated $10 per hour in tips") in a job posting, but not open-ended ranges (e.g., "$20 per hour and up"). The proposed regulations state that employers would be prohibited from including other forms of compensation in the range itself without disclosing the range of the actual base rate of pay.
'Good Faith' Compensation Range
According to the pay transparency law, employers must base the minimum and maximum annual salary or hourly rate on what they "believe in good faith" are the highest and lowest compensation amounts they will pay the position at the time of the advertisement. The proposed regulations would further define "good faith" belief as the range employers "legitimately believe they are willing to pay" for the position in consideration of other contextual factors, "such as the job market, current compensation levels, hiring budget," and the experience and education level required for the position.
According to the proposed regulations, employers would be allowed to adjust the range if needed, based on information from the hiring process. For example, an employer would be able to raise the pay ranges if after posting for the position it determines that an increased hiring budget is necessary to attract candidates with the desired qualifications.
The proposed regulations provide some further guidance for employers on the new pay transparency obligations. If finalized, they could provide employers with some guidelines on advertising remote positions out of state and with the flexibility to adjust pay ranges after posting.
There will be a sixty-day public comment period, during which employers and other stakeholders can provide comments. The comment period is set to expire on November 12, 2023.
In the meantime, employers may want to review their job postings and be prepared for compliance with the new pay range disclosure requirements taking effect on September 17, 2023.
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