United States: Countdown To New York City's Salary History Ban

On October 31, 2017, New York City's salary history ban, the most recent amendment to the City Human Rights Law (CHRL), becomes effective. 

The new law makes it an "unlawful discriminatory practice" for employers to (1) "inquire" about the salary history of an applicant for employment or (2) rely on salary history in determining the applicant's compensation and/or benefits, except where the applicant "voluntarily and without prompting" by the employer discloses his or her salary history. 

The law reflects the continuing trend in New York and elsewhere to eliminate wage gaps based on gender, race and ethnicity. Other jurisdictions to implement similar laws restricting employers' ability to inquire about salary history include California (effective January 1, 2018), Delaware (effective December 14, 2017), Puerto Rico, Oregon (effective January 1, 2019), Massachusetts (effective July 1, 2018), Philadelphia (stayed pending legal challenge) and San Francisco ( effective July 1, 2018). Numerous other states are considering similar measures.

Scope of Coverage

Employer and Applicant Coverage

Although the law does not specifically address employer coverage, guidance in the form of FAQs recently published by the City Commission on Human Rights (CCHR) confirms that the law applies to all employers of any size that are hiring job applicants in New York City. 

The Commission's guidance clarifies that the law generally does not apply to former employers who disclose information about the salary history to a hiring employer; however, it notes that such employers may be held liable if they intentionally aid and abet a violation by the hiring employer.

The Commission's guidance further confirms that most applicants for jobs in New York City are covered by the law. "Applicant," however, is not defined in the law or the guidance. An applicant Fact Sheet issued by the CCHR asserts that the law applies to both independent contractors and interns. Although this interpretation is consistent with application of the CHRL more generally, the salary history ban law itself expressly bans inquiries into "the salary history of an applicant for employment" or reliance on the salary history "for such an applicant."  See Intro. 1253, Section 1, (amending Administrative Code Section 8-107(25)(b) (1), (2) (emphasis added).

The law specifically does not apply to applicants for internal transfer or promotion with their current employer. However, employers should be mindful that, depending on the circumstances, a temporary employee or subcontractor who is offered permanent employment may qualify either as an applicant for a new position, in which case the salary history prohibitions apply to them, or for internal transfer or promotion, in which case they do not.

The law also does not apply to applicants for public sector jobs where salary is governed by a collective bargaining agreement.

Agent Liability

The law's prohibition against the unlawful discriminatory practices outlined above apply not only to employers, but also to employment agencies, as well as employees or agents of the employer or employment agency. The Commission guidance clarifies that headhunters are not exempted from the law's requirements, and further notes that headhunters who qualify as employers, employment agencies or agents of an employer, or who "aid and abet" a violation, may be liable under the law. 

The guidance further recommends that, to protect against liability, headhunters engaged in negotiations with prospective employers should obtain written confirmation from job candidates that they consent to the disclosure of their salary history and, further, that the prospective employer, to protect against liability, should request a copy of the applicant's written consent authorizing the headhunter to disclose that information.

Geographic Scope

The Commission's guidance attempts to clarify the geographic scope of coverage, noting that the law likely will apply where, for example, an applicant is asked about salary history during an in-person interview that takes place in New York City—presumably regardless of where the job is located and/or regardless of where the applicant lives. The guidance also notes that the law would apply even when the prohibited inquiry occurs outside New York City, but the impact is felt in New York City, for example, by virtue of the fact that the job is New York City.

If, however, the prohibited inquiry is made outside New York City and the job is located outside New York City, but the applicant resides in New York City, the law most likely would not apply. In other words, the guidance confirms that the same jurisdictional analysis typically applied in the broader CHRL context similarly applies to the salary history ban, which means an applicant's residency in New York City alone generally will be insufficient to establish impact in New York City.

How "Salary History" Is Defined

"Salary history" is defined under the law to include not only an applicant's current or prior wage, but also benefits and any other form of compensation he or she may have received. The Commission's guidance clarifies that "benefits" and "other compensation" are to be construed broadly and "may include many factors, including, but not limited to, a car allowance, retirement plan, or bonuses."

The Commission's guidance further explains how the law's prohibitions apply with respect to commission-based and profit percentage-based compensation, stating that while the amount of commissions an applicant earned are off limits, as is an applicant's current or former profit percentage, employers are permitted to ask about objective indicators of performance, such as the volume, value or frequency of sales, as well as the size of the applicant's book of business and profits generated.

Employers may, however, ask whether the applicant will have to forfeit deferred compensation or unvested equity by leaving his or her former employer and, the guidance explains, inquire as to the value and structure of that deferred compensation or unvested equity, request documentation to verify the same, and consider such information in making an offer to the applicant.

In addition, competing offers and counteroffers the applicant has received—and the value of those offers—are fair game and do not fall within the scope of "salary history."

How "Inquire" Is Defined

"Inquire" is broadly defined under the law to cover communication (in writing or otherwise) of any question or statement to an applicant, his or her current or prior employer, or a current or former employee or agent of such employer, for the purpose of obtaining the applicant's salary history. 

Searches of Public Records

Prohibited inquiries also include searching publicly available records or reports for the purpose of obtaining the applicant's salary history. While the Commission's guidance acknowledges that a prospective employer may search for general information about industry compensation standards, it specifies that such employer may not search for specific information about salary history that is intended to uncover a specific applicant's salary history. For example, the guidance notes, searching a website for information about the salaries paid to individuals with the applicant's specific title at the applicant's current or former place of employment on websites that collect such salary information would be deemed a violation of the law.

Applications for Employment

Job applications may not include a request for salary history information, even if, the guidance explains, the employer makes clear that any response is voluntary. Similarly, an employer who uses a boilerplate application that requests salary history will not avoid liability simply by adding a disclaimer that individuals in New York City or those applying for jobs in New York City need not answer the question.

Background Checks

The law does not prohibit an employer from verifying an applicant's disclosure of non-salary related information or conducting a background check (although any such background check should comply with the CHRL's requirements with respect to criminal history and credit history). If the employer inadvertently learns of salary history through verification of the applicant's disclosure of non-salary related information or a background check, it must not rely on such information for purposes of determining compensation. Of course, it is difficult if not impossible to "un-see" such information once disclosed, but nonetheless employers should take care not to utilize any inadvertently disclosed salary history information when negotiating and/or setting compensation. 

To guard against such inadvertent disclosures in the first place, employers who utilize third parties to conduct background and reference checks or employment history verifications are well advised to initiate a dialogue with those individuals or entities and confirm they are aware of the law's requirements and know not to request or compile information on salary history. Indeed, the Commission recommends that employers specify to reporting agencies that information about salary history be excluded from any background check report.

Accidental/Inadvertent Discovery of Salary History

As alluded to above, the law provides that if an employer accidentally uncovers salary history information, it will not have committed a violation, provided that it does not rely on that information in determining salary, benefits or other compensation.

Voluntary Disclosure by Applicant

The law provides that if an applicant "voluntarily and without prompting" by the employer provides salary history, then such information can be used to determine salary, benefits and other compensation, and the prospective employer may also verify the salary history (including by asking for a W-2). 

Of course, the devil is in the details—while the law itself does not provide any further guidance as to what is considered a voluntary disclosure of salary history, or what could be deemed to "prompt" disclosure, the Commission's guidance provides that "[a] disclosure of salary history is 'without prompting' if the average job applicant would not think that the employer encouraged the disclosure based on the overall context and the employer's words or actions." How this standard will be applied in practice remains to be seen.

Permissible Salary Discussions

The law does not prohibit prospective employers from informing applicants of, or the prospective employer and applicant from discussing, the position's proposed or anticipated salary or salary range and other compensation and benefits being offered.

For example, the employer may inform the applicant about the expected salary for the position at issue and discuss the applicant's expectations with respect to compensation, including, as noted above, whether the applicant would forfeit any unvested equity or deferred compensation by leaving his or her current employer. 

In addition, as noted above, the prospective employer may inquire as to any competing offers the applicant has received and the value of any such offers, without committing a violation.

Corporate Acquisitions/Due Diligence

Although not addressed in the law itself, the Commission's guidance discusses salary information in the context of the due diligence process that typically accompanies corporate acquisitions, stating that employees of a target company are not "job applicants" for purposes of the salary history ban and, therefore, a company seeking to acquire the target company may obtain salary information about the target company's employees.

The guidance further states, however, that whether the acquiring company may then rely on salary history information when absorbing employees from the target depends on the circumstances. If the acquiring company is making compensation decisions on a non-individualized basis, then it may rely on salary history information. If it is requiring target company employees to interview for positions, then the law may be implicated. The guidance recommends, in such cases, that any salary information about target company employees that is disclosed during the due diligence process not be shared with hiring managers or others making decisions about compensation. Without further guidance, it remains unclear at this time how these principles will play out.

Penalties for Violation

As the salary history ban law amends the CHRL to make any violation an "unlawful discriminatory practice," aggrieved job applicants will be able to pursue claims against employers or prospective employers with either the CCHR or directly in court. The full range of relief under the CHRL, which includes recovery of back pay, front pay, compensatory damages, punitive damages and attorneys' fees, will be available in any civil lawsuit for violation.

Civil penalties for violations may also be imposed by the CCHR, in amounts of up to $125,000 for an unintentional violation and up to $250,000 where the violation is willful and malicious.

What Should Employers Do Now?

New York City employers should immediately review and revise, if necessary, their hiring practices to ensure compliance. All individuals who interview job candidates, as well as others involved in the recruitment and/or hiring process, should be trained to focus their questions on applicants' skills and qualifications for the position at issue, as always, and their salary demands and expectations (rather than salary history). To the extent that employers check employment references provided by the applicant, they should make sure those conducting such verifications do not ask for salary history information.

If they have not already done so, employers should review and revise, if necessary, all employment applications and other hiring documents, including background check disclosure and consent forms, to ensure there are no inquiries regarding salary history. Similarly, all job postings and advertisements, regardless of the form or medium, should not inquire about salary or indicate that an applicant will be asked about salary.

Employers also should communicate with any third parties, including staffing agencies, recruiters and consumer reporting agencies that they use in the recruiting and/or hiring process, to ensure they are aware of their obligations under the law and are in compliance, and confirm the same in writing.

Regulations and/or enforcement guidance further clarifying the law's scope and requirements may be forthcoming. The Commission has indicated it intends to create educational materials on the law and conduct community outreach to ensure that workers know their rights. On October 24, 2017, the Commission is holding a session in conjunction with the U.S. Equal Employment Opportunity Commission and Public Advocate Letitia James to discuss the law, how it will be enforced and steps employers can take to ensure compliance. View information concerning this session here.

For More Information

If you have any questions about this Alert, please contact any of the attorneys in our Employment, Labor, Benefits and Immigration Practice Group or the attorney in the firm with whom you are regularly in contact.

Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
Ogletree, Deakins, Nash, Smoak & Stewart
Littler Mendelson
Proskauer Rose LLP
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Ogletree, Deakins, Nash, Smoak & Stewart
Littler Mendelson
Proskauer Rose LLP
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions