Two bills passed by both houses of the New York State legislature and currently awaiting submission to the governor for signature add a new, and significant, dimension to the range of pay transparency laws that are proliferating around the country.  Starting from the most public version of pay transparency requirements in the context of individual job postings, these laws impose substantial data retention and reporting requirements that may have widespread implications for future assessment of the equitableness of employers’ pay practices.

Pay Transparency in Job Postings

The first pending New York State law follows the model of New York City and Colorado in that it will require employers to disclose in their job postings the proposed wage or range of wages that would be paid for an advertised job, promotion or transfer opportunity.  The law will prohibit employers from refusing to interview, hire, promote, employ, or otherwise retaliate against an applicant or employee for that individual’s exercise of rights under the pay transparency law.

Where the law is more expansive than others is in two respects.  First, it additionally requires employers to include the job description in their posting or advertisement, if a description exists.  Second, and building on that requirement, the law expressly requires employers to retain:

• a history of the compensation ranges for each job, promotion or transfer opportunity; and
• the job descriptions for those positions.

While the pay transparency law will not require employers to report or otherwise collectively disclose that compensation history, another law passed by the state legislature and pending the governor’s signature will, if adopted, expand employee compensation reporting requirements for employers.

Equal Pay Disclosures – State Contractors

Described as relating to equal pay disclosure for state contractors, this second pending law will require contractors to submit reports that include a summary of their “workforce pay averages” (a term not defined by the legislation), which are to be calculated by job category, gender, race and ethnicity, and also report the percentage difference between pay averages in each category.  Businesses with 100 or fewer employees would be exempt from the pay disclosure reporting requirement.

The pending law makes clear that it does not mean to impose a mere paperwork exercise.  Rather, various state government leaders are to receive annual reports related to the information gleaned from the reports.  All the reports are required to be available to the public for inspection and copying, redacting only individual employee names and social security numbers that may have been included.  Further, all government agencies that have retained government contractors are required, “where practicable, feasible and appropriate,” to assess the equal pay practices of contractors submitting bids or proposals to be awarded a state contract.

Implications if New York State’s Pay Transparency Initiatives Become Law

There are substantial, and valid, considerations motivating this drive toward greater wage transparency, as we have discussed in past blog articles and in an interview I did with Dr. Ruth Gotian for Forbes.com.  And there also is reason to question whether these laws will actually achieve their intended objective of wage parity.  Will arming applicants and employees with more information be sufficient to overcome differences in negotiating style (that often correlate with gender and racial differences, whether that be attributable to natural proclivities, defensive techniques developed in response to unconscious bias, or other factors)?

If signed into law, these new legislative requirements pull employers into the center of a massive experiment.  Historical data that employers are required to gather and retain provides a ready source of new information that plaintiffs’ lawyers can likely obtain through discovery and utilize in support of legal claims.  And it is not a far leap to anticipate subsequent legislation that requires employers to publicly report, publish or analyze the data that they will soon be required to collect and retain.  The proposed equal pay disclosure law for state contractors already exemplifies that approach.

Pay transparency laws, particularly in a state like New York where employees have a protected right to discuss salary information with one another, will invite probing questions from existing employees who suddenly learn they are far lower on the pay scale than they had realized.  Already HR colleagues have reported that they are fielding these types of inquiries as to rationale and pressure to boost pay for certain employees.  Employers that have not holistically evaluated their compensation philosophy, methodology and baseline data, and those employers that do not currently have well-defined roles that align with detailed job descriptions and salary bands, may face serious employee relations issues, or worse, under pay transparency mandates.

In New York State, the earliest any of these laws will take effect is November 1, 2022.  Perhaps a pay audit and equity analysis as a summer project?

By Tracey I. Levy