Legislation Clarifies Reach of New York Salary Transparency Law to Remote Workers

New York Governor Kathy Hochul recently signed legislation amending the state’s recently enacted salary transparency law (the Salary Transparency Law) requiring the disclosure of compensation ranges in job advertisements. As amended, the Salary Transparency Law encompasses remote work, clarifies the definition of a covered “advertisement,” and removes what would have been an onerous recordkeeping requirement.

Salary Transparency Law Pre-Amendments

Initially enacted on December 21, 2022, the Salary Transparency Law created a statewide salary transparency requirement effective September 17, 2023. The Salary Transparency Law applies to all employers of four or more employees in New York when advertising a job, promotion, or transfer opportunity. Employment advertisements must disclose the “compensation or range of compensation” for a position, with a potential civil penalty for violations of up to $1,000 for a first violation, $2,000 for a second violation, and $3,000 for a third or subsequent violation.

As originally enacted, the Salary Transparency Law largely tracked the preexisting New York City salary transparency law except that it (1) instituted a requirement for employers to keep detailed records of salary ranges for six years and (2) required employers to include a job description when advertising a job, promotion, or transfer opportunity.

Amendments

The legislation signed by Governor Hochul on March 3, 2023 (the Amendments) amends the Salary Transparency Law in four critical respects.

First, the Amendments clarify the Salary Transparency Law’s application to remote workers. The law originally applied to jobs that could or would be performed, at least in part, in the State of New York, but did not directly address remote workers.

Pursuant to the Amendments, employers must disclose the compensation or range of compensation for any position that will be physically 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.”

Accordingly, job advertisements must disclose compensation for certain positions even where the job will ultimately be performed from another state if the individual reports to an office, a worksite, or a supervisor in New York.

Second, the Amendments clarify that a disclosure of compensation ranges is not required where compensation is made entirely on commission. Rather, employers must only include “a general statement that compensation shall be based on commission,” which makes disclosure much simpler for commission-based employees. However, this disclosure would not be sufficient if a role’s compensation was based partially on commissions and partially on set wages.

Third, the Amendments remove the Salary Transparency Law’s original recordkeeping requirement, which would have created an independent violation for employers that did not keep records of salary disclosures and job descriptions. Under the amended law, employers will no longer expressly be required to keep records of compensation range and job description history for each covered advertisement.

However, employers should continue to maintain records of all compensation provided to employees pursuant to preexisting New York Labor Law recordkeeping obligations.

Fourth, the Amendments define “advertise” under the law as “to make available to a pool of potential applicants for internal or public viewing, including electronically, a written description of an employment opportunity.” The definition is consistent with the New York City salary transparency law.

As amended, the Salary Transparency Law will go into effect on September 17, 2023, and the New York State Department of Labor (NYS DOL) is required to promulgate rules and regulations to effectuate the law. The NYS DOL has not yet issued regulations or guidance, and it may not do so until closer to the September effective date.

Analysis

The Amendments leave many questions unanswered, particularly regarding the application of the Salary Transparency Law to advertisements for remote positions. As amended, the Salary Transparency Law appears to apply to all advertisements for jobs that will physically be performed, at least in part, in New York or jobs performed outside of New York if the individual reports to a supervisor in New York or is assigned to a New York facility as a home office.

However, this language is inconsistent with the legislative history, which implied that the Amendments were only intended to apply to individuals working fully remotely who report to a supervisor in New York, not individuals who are working at another employer location outside of New York.

The Salary Transparency Law does not create a private right of action and instead permits the NYS DOL to investigate complaints and assess penalties, so the department’s forthcoming regulations and/or guidance may address the application of the law to such jobs.

Next Steps

Ahead of the law’s September 17, 2023 effective date, New York employers should consider (1) determining and documenting salary ranges for all positions where individuals are currently working in New York; (2) conducting a pay audit (and consider conducting the audit under privilege) for all positions reporting to a supervisor, office, or other worksite in New York; and (3) continue monitoring for the final NYS DOL guidance.