New York state's pay transparency law took effect on September 17, 2023. Here are four tasks to check off to help manage your compliance with the new law.
In September 2023, New York joined the growing number of states that require employers to disclose compensation to applicants and employees. As these pay transparency laws take shape across the country, employers will need to understand their compliance obligations and, if they're operating in multiple states, coordinate their compliance.
With that in mind, let's explore New York's pay transparency law.
Requirements for New York pay transparency
Pay transparency laws generally mean that covered employers have to disclose compensation for an open role. However, the precise requirements vary by state and sometimes by locality as well. For instance, pay transparency laws similar to New York state's are already in force in New York City and Ithaca as well as Albany County.
Under New York's state law, any employer with four or more employees must:
- Post the compensation, or a range of compensation, whether salaried or hourly, when advertising for a job, promotion or transfer:
- that will be physically performed, at least in part, in the state or
- where the job will be physically performed outside of New York but reports to a supervisor, office or work site in New York
- Include a job description for the position, if a description exists
- Not retaliate against employees or applicants who exercise their rights under the law
Under New York's law, the penalties for violating pay transparency can be up to $1,000 for the first violation, $2,000 for the second and $3,000 for each subsequent one.
4 ways to prepare your policies and practices for compliance
Complying with the New York state law may require your organization to update its business practices. Here are some areas to review.
1. Identify covered positions
New York has clarified, through amendments to the initial law, which open roles are subject to the requirements. The latest changes indicate that pay transparency must be provided for positions even when work is performed outside of the state by employees who report to an employer within the state.
This means you'll need to understand whether the job duties for a position will be executed in or outside the state and know whether the person in that position will report to a supervisor or department that is in or outside the state.
2. Document compensation levels
New York state's pay transparency law requires organizations to share compensation ranges for jobs, promotions and transfer opportunities both internally and externally when advertising for a position.
While an amendment to the law took away the requirement to maintain a history of these ranges, it's still important to document your established compensation levels. You'll likely also want to examine them for fairness, and you may consider conducting a pay equity audit. Depending on your hiring pace, frequency of pay adjustments and the ranges you've listed for positions, periodic audits like these can help mitigate the risk of pay transparency violations as well as pay inequity claims.
3. Establish and communicate compensation ranges
As noted, covered employers must share compensation range information both outside and inside the organization. There's no guidance yet on the size of the compensation range that must be disclosed under New York's law. But generally, the broader the range, the less useful it is to the candidate — and the less likely you're complying in good faith with the pay transparency law. At the same time, a range that's tightly targeted may provide actionable information but can quickly become outdated. You'll need all stakeholders on board to strike a balance between too wide and too narrow a range while ensuring compliance.
4. Review job descriptions
New York state law requires the disclosure of job descriptions if they exist. While most organizations have job descriptions available for new and open positions, they may not be updated or aligned with the compensation for the role. If a job description doesn't provide sufficient pay detail or the compensation appears low or excessive, applicants, employees and regulators may question the hiring process and the integrity of the data.
Before posting a job, set aside time for stakeholders, such as hiring managers and recruiters, to review the job description to ensure it reflects the role's responsibilities and requirements.
Advice going forward in a new era of pay transparency
Get ahead of the changes for all positions
While the New York law outlines what's required when you're advertising for open jobs, promotions and transfers, you may want to assess compensation ranges and job descriptions for every position even if you don't have immediate plans for it to open up. The role may not currently be subject to a pay transparency law, but it may soon be.
Be prepared to answer questions about methodology
Employers covered under New York state law should establish and maintain compensation for every role using a credible and defensible methodology. It can be useful to have a public-facing version of this ready to share, especially if you have any third-party research for support. When a prospective employee, existing staff member or compliance regulator questions how you established the compensation for the position, having a prepared, detailed response can go a long way to satisfy their concerns.
Anticipate current employees' pay inequity claims
When you provide compensation information under the New York law, existing employees may question whether they're being fairly compensated, which may lead to claims of pay inequity. It's a good idea to be ready for this. Before the law takes effect, identify current employees who are in similar roles and whose compensation is below what you plan to advertise. Consider meeting with the employee to discuss why the difference in pay exists and how you plan to address it.
Monitor and check on your practices regularly
As you establish processes to comply with New York's pay transparency law, it might be helpful to know if your pay practices reflect compensation that is commensurate with the role. It can be useful to track how long it takes to fill positions, as this can help show whether the compensation is attracting applicants. You may also want to track your employee's and applicant's feedback regarding your pay and job descriptions to gain insight into whether they're viewed as fair, accurate and competitive.
Let ADP help you stay on top of new developments and best practices in pay transparency. Visit our pay transparency hub to access checklists, resources and state-by-state laws, and to check out our people analytics solutions.