By Catherine I. R. Pontoriero, Esq. and Rachel H. Khedouri, Esq
On September 13, 2023, the New York State Department of Labor (“DOL”) issued proposed regulations regarding the State’s new pay transparency law, providing guidance to employers on a range of topics including the law’s applicability, the information to be included in covered job advertisements, how to formulate an acceptable range of compensation, and who may enforce the law. (For more detail on the new law, see our prior eAlerts HERE, and HERE.) The public has 60 days to submit comments on the proposed regulations.
Here are some of the highlights of the regulations for employers preparing job advertisements:
1. The law’s exemption for temporary help firms does not apply to internal positions.
The pay transparency law, which became effective on September 17, 2023, applies to private employers with four or more employees, except temporary help firms. The regulations clarify that the exemption for temporary help firms applies only to advertisements for employees hired to perform work for other organizations. The law does not apply to temporary help firms when the opportunity concerns working at the firm itself, such as when the temporary help firm seeks to hire an internal administrative assistant. The proposed regulations also clarify that the law does not apply to government agencies.
2. The law does not apply to jobs with only incidental or infrequent contact with New York.
One of the most common questions when the pay transparency law was first passed was whether it applies to remote positions. The amendment signed by Governor Hochul in March clarified that the law applies to any advertisement for a position that either (i) will be physically performed at least in part in New York or (ii) will be performed outside of New York but report to a supervisor, office or worksite in New York. The proposed regulations further clarify that opportunities physically performed outside of New York include those where a prospective applicant is working remotely, telecommuting, or working from home. Additionally, the proposed regulations provide that the law does not apply where the position will have only incidental or infrequent instances of being physically present in New York for a work-related purpose. Thus, employers are not required to comply with the law for advertisement of positions that require attending an occasional meeting or conference in New York, or merely communicating with employees based in the state.
3. The law applies to advertisements posted in various media and, where known to the employer, those posted by third parties.
The proposed regulations provide that advertisements are covered by the pay transparency law regardless of the medium in which they are posted and regardless of whether the employer posts the advertisement directly or uses a third party, such as a recruiter or job board. Employers are not responsible for advertisements that are posted by a third party without their knowledge or consent, for example, advertisements that are “scraped”. The proposed regulations also make clear that the pay transparency law does not require employers to advertise nor does it dictate what medium employers should use to post advertisements.
4. Employers are not required to create job descriptions.
The law requires employers to include a job description in advertisements, but only if one exists. The proposed regulations explain that there may be limited circumstances where the title of a position conveys the full extent of the position’s job duties, giving the example of advertising for a “dishwasher.”
5. The range of compensation disclosed must be limited to the base rate of pay for a single opportunity.
The proposed regulations clarify that a “range of compensation” means the base rate of pay, such as an annual salary or an hourly rate. It does not include other kinds of compensation or benefits, although an employer may choose to include that in the advertisement provided that the base rate of pay is clearly defined. For example, an appropriate range of compensation for a tipped job can be “$18 per hour”, “$18 per hour plus tips,” or “$18 per hour plus an estimated additional $10 per hour in tips” but may not state “$28 per hour.”
Additionally, the proposed rules make clear that the range of compensation cannot be open ended. For example, it is not in compliance with the law to post that the compensation rate is “$20 per hour and up” or “maximum $60,000 per year”.
Moreover, the range of compensation must be for a single opportunity and a single geographic location. If the advertisement covers multiple locations and/or multiple levels of seniority, then multiple ranges of compensation must be listed in the advertisement to cover each opportunity. For example, if the advertisement is for two data analysts, one based in New York and one in San Francisco, there must be separate ranges of compensation listed for each city (e.g., New York: $70,000-90,000 and San Francisco: $65,000-80,000). If the compensation information is long or extensive and does not fit in the space allotted in the advertisement, then the employer may provide that information on an attachment to the advertisement if the attachment is available free of charge, is easily accessible, and the main body of the advertisement “clearly and conspicuously states” where the range of compensation information can be found.
6. Good faith does not preclude adjusting the range of compensation.
Under the law, the range of compensation must include the minimum and maximum annual salary or hourly rate that the employer believes in “good faith” to be accurate. The proposed regulations specify that good faith is what an employer is willing to pay a successful applicant or employee at the time it posts the advertisement. An employer may adjust the range of compensation based on additional information learned during the hiring process. For example, an employer acts in good faith if it discovers that it is unable to attract a qualified candidate at the initial range of compensation posted and posts a subsequent advertisement with a new range of compensation. An employer also acts in good faith if it attracts a candidate who exceeds the qualifications for the advertised position and the employer offers that applicant a higher salary than what was listed in the advertisement.
7. Current, prospective, or potential employees or applicants or their representatives can pursue claims for violations under the pay transparency law.
Finally, the proposed regulations clarify the language in the pay transparency law providing that any person “claiming to be aggrieved by a violation” of the Act may file a complaint. Under the proposed regulations, “any person” means a current, prospective, or potential employee or applicant who claims to be aggrieved, an organization acting on such person’s behalf, or a recognized and certified collective bargaining agent on such person’s behalf.
NFC will continue to monitor the status of these proposed regulations and report on any updates. In the interim, employers should consult the proposed regulations when drafting advertisements and otherwise implementing the pay transparency law. Although the regulations are not currently in effect, they do reflect the intentions of the DOL in its enforcement efforts.
If you need assistance preparing compliant advertisements or have any questions on pay transparency laws in New York or other jurisdictions, please reach out to the NFC Attorney with whom you typically work or call us at 973.665.9100.