by John M. Godwin, Charles H. Kaplan, and Kinsey A. O’Brien

As we previously reported, New York has enacted statewide “pay transparency” legislation that will take effect on September 17, 2023. On March 3, 2023, Governor Kathy Hochul signed an amendment to the legislation that clarifies the application of the law, including with respect to remote workers, and removes certain recordkeeping requirements. The amendments also expand the exterritorial reach of the legislation by applying it to searches for workers who will not work at all in New York but have a reporting relationship to New York.

The Facts

As a reminder, the pay transparency law, which is Section 194-b of the New York Labor Law, will require employers with four or more employees to include the following whenever they “advertise” for a job, promotion, or transfer opportunity:

• The compensation or “range of compensation” for the job, promotion, or transfer opportunity; and
• The job description for the job, promotion, or transfer opportunity, if one exists.

The original legislation didn’t define the term “advertise.” The amendment adds the following definition: “’Advertise’ shall mean to make available to a pool of potential applicants for internal or public viewing, including electronically, a written description of an employment opportunity.”

This is a broad definition and will likely encompass internal postings on an intranet or job board, postings in newspapers and “want ads,” as well as electronic postings on the employer’s website or job posting sites such as Indeed.com or ZipRecruiter.

Originally, the legislation applied to any job, promotion, or transfer opportunity that “can or will be performed, at least in part, in the state of New York.” The amendment both narrows and expands this language.

On one hand, the amendment removes from the law’s scope jobs that “can” be performed within New York, instead applying the requirements to jobs that “will physically be performed, at least in part” in New York. On the other hand, the amendment expands the law to apply to jobs that “will physically be performed outside of New York but report to a supervisor, office, or other work site in New York.”

This change substantially broadens the potential scope of the law and would purport to extend its applicability to workers who may never set foot in New York, but who have a reporting relationship to someone in New York.

Moreover, it’s not clear whether the reporting relationship must be a direct or first tier reporting relationship, or whether reporting to a New York-based supervisor or office anywhere up the supervisory chain will be sufficient to bring the position within the law’s supposed scope.

Whether this extraterritorial application of New York law will withstand judicial scrutiny remains to be seen. As it currently stands, beginning September 17, employers will need to evaluate carefully not only where the employee will physically work, but also the location of the supervisors and offices to which they will report before posting any internal or external advertisements.

Difference Between State and New York City Laws

Notably, this aspect of the amendment creates a key difference between the statewide and New York City pay transparency laws. The New York City law applies to jobs that can or will be performed in New York City. Accordingly, before advertising a fully remote position, employers should consider whether there is a chance that they might hire a New York City applicant.

Finally, the amendment removes the requirement that employers keep and maintain records demonstrating compliance with the pay transparency law, such as “the history of compensation ranges” and job descriptions for each advertised position.

Practically, however, employers should consider maintaining at least some records, such as copies of covered job postings, so they’re prepared to demonstrate their compliance with the new requirements.

Bottom Line

The new amendment provides employers with some clarity regarding the pay transparency law’s application, but also presents a host of new questions and uncertainties around extraterritorial application of the law. More developments on these issues may be forthcoming as the New York State Department of Labor is required to publicize rules and regulations under the law.

In the meantime, employers should start planning to comply with the law starting September 17, 2023. In addition, employers need to remember to comply with pay transparency laws in New York City, Westchester County, Albany County, and the City of Ithaca, as well as in other states, counties, and cities around the nation.

If you have any questions about the pay transparency law or how it may impact your business, please contact John M. Godwin (716-848-1357), Charles H. Kaplan (646-218-7513), Kinsey A. O’Brien (716-848-1287), or any other member of Hodgson Russ LLP’s Labor & Employment Practice.