New York City enacted two new pay data reporting laws, Int. 982-A and Int. 984-A, that will require employers that have 200 or more employees working in NYC to submit annual reports that will include pay data by race, ethnicity, and sex.
Who Are Covered Employers?
Private employers with 200 or more employees working in NYC are required to report. All employees performing work for compensation, including remote workers, should be counted and included for reporting purposes. Employer size should be determined by counting the highest total number of employees at any point during the reporting year.
What Are the Reporting Requirements?
Employers will be required to submit compensation information, categorized by race/ethnicity and gender, including:
- Compensation bands
- “Employers will use Box 1- Wages, tips, other compensation” of the Form W-2 to measure pay for reporting purposes.
- Employers may not use gross annual earnings.
- Hours worked
- The hours-worked data that employers will use is based off the same hours-worked that employers record for the Fair Labor Standards Act (FLSA). FLSA hours worked do not include paid leave, such as sick and safe leave, paid time off, vacation leave or paid holidays.
- Employers have the option to report employees exempt from the FLSA, by designating proxy hours of 40 or 20 hours per week for each week the employee worked that year, or to report actual hours worked if the employer already maintains records of actual hours worked for employees.
The laws do provide the City the right to change the information requested in the reporting, including reporting options for different gender identities not currently recognized by EEO-1 reporting requirements.
In addition to reporting, employers will be required to separately submit a signed statement confirming the submission of the pay report and the accuracy of its information.
When Will Reporting Begin?
The law requires that an agency be designated by December 4, 2026, one year after the law is effective. The designated agency will have one year to develop a standardized fillable form for covered employers to submit pay reports anonymously. Employers will be required to submit pay reports to the agency using this form sometime in 2027 and going forward on an annual basis.
What Are the Penalties for Noncompliance?
The designated agency shall publish annually on its website a list of covered employers that are not in compliance because they have not submitted a signed statement confirming the submission of a pay report and its accuracy via the anonymous method developed by the agency.
Violations of the law will subject employers to civil penalties, as follows:
- First offense: A covered employer will be subject to a written warning if the employer provides, within 30 days of the service of the summons, documentation indicating that such violation has been cured. If the employer fails to provide such documentation, they will be subject to a civil penalty of $1,000; and
- For any subsequent offense, a covered employer will be subject to a civil penalty of $5,000.
What Is the Purpose of These Laws?
Within one year after covered employers submit their pay reports, and annually thereafter, the designated agency will conduct a pay equity study and publish data contained in the reports in the aggregate, and in a manner that does not reveal covered employers’ or employee’s identifying information.
Covered Employer Next Steps
Employers who currently have employees or plan to hire employers in NYC and are close to the 200 employee threshold should review their pay practices, as this is an ideal time to ensure adherence to federal Equal Pay Act and New York’s Pay Equity Law.
Sequoia One will continue to monitor and communicate any developments that will require employer action items as this legislation continues to be implemented.
Connect with a Sequoia consultant to learn how Sequoia’s compliance services are integrated in our benefits services and tailored solutions. And if you’re already a Sequoia client, stay on top of your employer obligations with your Compliance Checklist that highlights important compliance dates, action items, and resources.
