United States: NY State Of Mind: New State And City Laws (Part 1) – NYC's Salary History Ban

This is the first in a series of blog posts concerning recent employment law developments in New York State and City:

On October 31, 2017, NYC's salary history ban took effect (Int. 1253-2016). With limited exception, this law bars employers of all sizes from inquiring or requesting information – through any means, including searches of public records, background checks, and requests to prior/current employers – about a job applicant's salary history, or relying on such information in setting compensation for a particular applicant. The ban extends to virtually all wages, benefits, bonuses, commissions earned, retirement plans, profit percentages, auto allowances, and other compensation. Nor can employers make disclosure of such information a voluntary option (e.g., on a job application).

Notably, the law applies not only to applicants for employment, but also to applicants for independent contractor work who themselves have no employees. It does not, however, apply to applicants for internal transfer or promotion within their current employer.

If an employer inadvertently uncovers information about an applicant's salary history by, for example, searching publicly available information about the applicant, the employer may not rely on that information in determining what to offer the applicant in salary, benefits, and other compensation. On the other hand, if the applicant voluntarily and without prompting discloses his or her salary history, the employer may in fact consider such information in determining compensation terms.

Moreover, although the law bans all salary history inquiries, it does permit employers to inquire into an applicant's compensation expectations or demands. The law also permits employers to make statements about the anticipated salary, salary range, bonus, and benefits for a particular position.

Geographic Scope

As to the geographic scope of the law's coverage, the NYC Commission on Human Rights (NYCCHR), the local agency that enforces the law, has said that a violation of the Act can occur if the impact of the unlawful discriminatory practice is felt in New York City. More particularly, the NYCCHR has stated that "[i]f an unlawful discriminatory practice, including an inquiry about salary history, occurs during an in-person conversation in New York City, there will likely be jurisdiction because the impact of the unlawful discriminatory practice is felt in New York City. If an unlawful discriminatory practice occurs outside of New York City, there could be jurisdiction if the impact of the unlawful discriminatory practice is felt in New York City. Entities should apply the same jurisdictional analysis in this context that they would involving other areas of the City Human Rights Law (e.g., in the employment context, residency in New York City alone, without more, is generally not enough to establish impact in New York City)."

Headhunters

Employers who work with headhunters to locate job applicants should note that the law applies not only to employers, but also to agents of the employer (which headhunters may qualify as under certain circumstances). Agents may indeed be liable for "aiding and abetting" an unlawful discriminatory practice if they disclose the salary history of a prospective employee without his/her permission.

Employers should therefore confirm with all headhunters that they are aware of the new law, and understand that full compliance is expected and required. According to the NYCCHR, "[t]o protect against liability in circumstances in which a candidate offers their salary history information voluntarily and without prompting for a headhunter to use in the course of negotiating with a potential employer, the headhunter should obtain written confirmation from job candidates that they consent to the disclosure of their salary history."

Corporate Acquisitions

According to the NYCCHR, a company seeking to acquire another company may obtain salary information about employees of the target company as part of the due diligence process if such employees are not considered job applicants. However, if employees of the target company are being asked to interview for positions with the acquiring company, the salary history ban may be implicated. Per the NYCCHR, "[i]n those circumstances, it is recommended that any salary information about employees from the target company that is disclosed during the acquisition due diligence process not be shared with hiring managers making decisions about compensation."

Best Practices

  • During the hiring process, focus questions on applicants' salary demands, skills, and qualifications
  • Ensure that job applications and other forms do not include questions about applicants' salary history, even if such questions are framed as "voluntary"
  • Modify written policies and educate interviewers and hiring staff to prohibit inquiries about applicants' salary history

This article is presented for informational purposes only and is not intended to constitute legal advice.

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