Even California knows better

Several recent anti-business measures of note followed a similar path: a liberally-minded west coast jurisdiction (usually San Francisco or Seattle) passes the legislation at the local level, and it is then passed statewide, before eventually making its way to the New York City Council and our state Legislature. We saw this most recently with the $15 an hour minimum wage and Paid Family Leave.

One recent effort actually started with the federal government before trickling down to New York State. Earlier this year, Governor Cuomo issued Executive Order 162. The order requires, among other things, state contractors of any size to submit reports to the state on their pay practices, broken down according to the gender and racial makeup of their workforce. The Executive Order mandates that most contractors submit their data quarterly, with contractors and subcontractors on construction projects required to report monthly. While New York’s order was modeled after a similar program on the federal level, the federal order was less onerous and has been stayed under the current administration.

You may be wondering why we referenced the west coast. Well, just last week California Governor Jerry Brown vetoed a similar piece of legislation for numerous reasons, including saying: “…it is unclear that the bill as written, given its ambiguous wording, will provide data that will meaningfully contribute to efforts to close the gender wage gap.” We would further note that the vetoed California legislation was far less onerous than New York’s, requiring that only employers with 500 or more employees submit said data, and that such data only be reported every other year.

New York’s mandate is far more broad and raises additional concerns, including:

– requiring pay data reports on a quarterly basis for most state contractors (all contracts valued at more than $25,000), and monthly for construction contracts valued at more than $100,000, compared to the annual reports required under the now-stayed federal EEO-1, and the biennial reports that would have been  required under the new California law.

– requiring pay data from all subcontractors as well, regardless of the value of subcontract, and it can require contractors to assure compliance by, or even mandate that they collect pay data from, their subcontractors.  This will put employers in the difficult position of having to submit confidential pay data to competitor firms.

– unlike the federal initiative,  which was adopted through a formal rulemaking process, or the California proposal that was passed by the state legislature, New York’s proposal was launched by an executive order issued with no notice, and with no input from affected employers.  Since it was not subject to the state Administrative Procedures Act, as a formal rulemaking would be, it had a limited 30 day public comment period, and did not require the state to do an impact assessment or consider alternative compliance measures for small business.

– while the federal EE0-1 required pay data to be reported by broad occupational categories, the state requires reports by one of more than 800 occupational titles, dramatically increasing compliance efforts and costs  (and, remember, under the New York State program, this is a monthly or quarterly, not annual, report.)

– the “granularity” of the state pay data reports will allow for the identification of individual’s pay level, as well as details about an employer’s general pay practice, but there is nothing in the Executive Order that provides legal protection against public disclosure of this confidential business and personal data.

To the administration’s credit, they have been willing to listen to concerns raised by The Business  Council and others – yet the order remains in place. We hope the recent action in California will prompt New York State officials to take a second look at EO 162 and make significant adjustments, or better yet, scrap the program entirely.