(a) Subdivisions 5 and 7 of section 130 of the Civil Service Law were added by chapter 618 of the Laws of 1967. Under subdivision 7, which was amended by chapter 307 of the Laws of 1979, the director of the Division of Classification and Compensation, Department of Civil Service, may, subject to the approval of the Director of the Budget, authorize payment of additional salary (a pay differential) to be added as an adjustment to the hiring rate and job rate of the salary grade or grades for a given occupation in one or more areas of the State, provided he finds that other employers in such area or areas pay wage rates for the same or a similar occupation substantially higher than the rates paid by the State. Such geographic area pay differential shall be paid to employees whose basic annual salary is at or below the unadjusted job rate of the salary grade, less any amount of additional payment employees may be receiving as a result of a previously authorized geographic area pay differential. Employees whose salaries are above the unadjusted job rate for the salary grade shall receive a portion of the differential sufficient to increase their salary to the adjusted job rate, less any amount of additional payment which such employees may be receiving as a result of a previously authorized geographic area pay differential.

(b) The purpose of a geographic area pay differential is to enable the State to pay competitive salaries for a particular occupation in a “high rate” area, in order to attract and retain competent personnel, without having to raise the basic salary grade for the occupation on a statewide scale and without having to establish a higher basic rate of pay than that generally paid by other employers in the State for the same occupation.

(c) A geographic area pay differential is not, nor should it be construed as, a substitute for general salary adjustments.

(d) A geographic area pay differential cannot be authorized because of differences in the cost of living among areas of the State.

(e) The law specifies that a geographic area pay differential shall be in addition to and not part of an employee's basic annual salary, and shall not affect or impair any performance advancement payments, performance awards, longevity payments or other rights or benefits to which an employee is entitled; provided, however, that any differential shall be included as compensation for retirement purposes. It may be terminated or changed by action of the Director of Classification and Compensation, subject to approval by the Director of the Budget.