The New York City Council is proposing a bill (Int. No. 982) that would require employers to disclose pay data. Under the law, employers with more than 25 employees working in New York City will be required to report to the Department of Consumer and Worker Protection (DCWP) information relating to their employees in order to improve wage transparency.

New York City’s pay transparency law took effect Nov. 1, 2022, and the city’s enforcement arm has recently amped up its activity.

The proposed pay data reporting law is viewed as a tag-along measure to improve the effectiveness of its pay transparency law. If passed, employers in NYC will have additional measures to comply with as soon as 2025.

Pay Data Reporting Law Specifics

Under the NYC pay transparency law, employers are currently required to provide “good faith” pay ranges on all job postings.

Under the proposed pay data reporting law, the information required to be reported includes:

• salary and wages earned for the previous calendar year;
• the month and year the employee was hired;
• job title;
• gender; race and ethnicity; birth year;
• the borough in which the employee works;
• whether the employee is a member of a labor union;
• whether the employee works more than 35 hours per week, less than 35 hours per week, or on a seasonal or temporary basis;
• and whether the employee is a manager.

The first report would be due on Feb. 1, 2025, and subsequent reports would be required annually thereafter. Employers covered by this bill would also have to submit a digital affirmation to DCWP every three years, which certifies the employer’s compliance with federal, state, and local equal pay laws.

U.S. Pay Data Reporting Background

If the NYC law is passed, it would become the first city to impose an employer pay data reporting requirement and just the third jurisdiction in the U.S.

California and Illinois have implemented pay data reporting requirements. And the Equal Employment Opportunity Commission recently announced plans to issue a proposed rule next year on collecting compensation data from employers. This is according to the Biden administration’s newly released regulatory agenda .

If the proposal moves forward, it would bring back an Obama-era requirement for large businesses to annually submit their pay data by race, sex, and job category to the EEOC.

Currently, organizations with 100 or more employees are required to submit EEO-1 Component 1 reports annually to the EEOC. These reports are an annual summary of an organization’s demographic workforce data, but do not include pay data.

That previous reporting mandate — Component 2 pay data — faced legal challenges during the Trump administration and ultimately resulted in court-mandated pay reporting for a limited period of time. The commission later decided to discontinue the collection pending further study, but the EEOC’s current Democrat majority has signaled interest in reinstating a pay data collection.

Additionally, other global jurisdictions, namely the European Union, have implemented pay data reporting laws.

Comply With Pay Data Reporting Requirements

Pay data reporting is rapidly expanding around the globe and NYC is just the latest example. There are 54 jurisdictions that have already adopted or are in the process of implementing some form of pay data reporting requirement.

Employers in NYC that could be affected by the proposed legislation should continue to monitor to see if they should prepare to comply. We will continue to provide updates on this legislation.

While the proposed NYC bill is pending, a few preliminary action items to prepare for pay data reporting requirements in general include:

• Pay explainability. Prepare to explain how you differentiate and define performance in setting base salaries. Pay transparency legislation means workers must be given access to criteria used to define salary and pay raises.
• Analyze pay gaps. Identify the causes where pay disparities exceed 5%. If there is no objective justification, we recommend addressing any anomalies to remove those unexplained gaps.
• Intersectional pay equity audit. Intersectionality is essential to close the gender pay gap. It recognizes that individuals can experience discrimination and inequality based on the intersection of multiple identities, such as race, gender, disabilities, age, and more. NYC’s requirement would underscore where these potential disparities occur.

If you are an NYC employer that is already required to comply with a pay data reporting law, or will in the future, this is another added wrinkle.