On May 4, 2017, Mayor Bill de Blasio signed a bill amending the New York City Human Rights Law that will prohibit all New York City employers from inquiring about a prospective employee's salary history. Effective October 31, 2017, it will be an "unlawful discriminatory practice" to inquire about the salary history of a job applicant or to rely on salary history to determine a prospective employee's salary, unless the applicant voluntarily shares the information. New York City's stated purpose of the law is to reduce the likelihood of perpetuating existing gender pay inequity.
Employers with operations in New York City should immediately review their recruiting and hiring practices and consult with legal counsel to ensure future compliance with the new legislation. For your convenience, an overview of the new ban on salary history inquiries is below.
What Inquiries Are Banned?
The new legislation makes it an "unlawful discriminatory practice" to make any inquiry regarding a job applicant's salary, with very limited exceptions. This includes asking the applicant, the applicant's current or former employer, or a current or former employee or agent of the applicant's current or prior employer. The employer is also prohibited from relying on an applicant's salary history to determine the salary, benefits, or other forms of compensation, including in the negotiation of a contract. For example, if the prospective employer discovers the applicant's salary history during a background check, it may not be considered in any salary determination.
May an Employer Ever Consider Salary History?
Notwithstanding the above, if an applicant "voluntarily and without prompting" discloses his or her salary history, then the employer may use this information to help determine the salary, benefits, and other compensation of the position. In such cases, the employer may also verify the salary history.
What Is Included in "Salary History"?
"Salary history" includes current or prior wages, benefits, and any other form of compensation. Salary history does not include any objective measure of the applicant's productivity, such as revenue, sales, or other production reports.
May Employers and Applicants Discuss Salary at All?
Yes. Employers and applicants may discuss:
- the proposed or anticipated salary (or salary range) for the position;
- the applicant's salary expectations;
- whether the applicant would be forfeiting equity or deferred compensation by taking the position; and
- other objective measures of the applicant's performance, such as revenue or sales attributable to the employee's job history.
When Does the Ban Apply?
The ban applies during all stages of the employment process. The ban does not apply to internal transfers or promotions.
What Are the Penalties for Noncompliance?
Pursuant to New York City Administrative Code § 8-126, where the New York City Commission on Human Rights finds an unlawful discriminatory practice, it may impose a civil penalty of up to $125,000. In the case of "willful, wanton or malicious acts," the penalty may go up to $250,000. Individuals may also file a civil action and seek relief in the form of back pay, front pay, compensatory damages, and attorney's fees.
How Can Employers Prepare for Implementation of the Ban?
Employers should engage in a few best practices to prepare for the ban, including:
- review applications, hiring practices, and related policies to eliminate all questions regarding compensation or salary history;
- review the new legislation with all people involved in the recruiting and hiring process and make sure that they are properly trained;
- be careful not to "prompt" an applicant into disclosing salary history;
- ensure that salaries are established in compliance with all laws, including the federal and state Equal Pay Acts;
- consider setting salaries or salary ranges for a position at the onset of the hiring process; and
- employers may include questions on job applications and in interviews regarding salary expectations.
The law will go into effect on October 31, 2017.
Read the text of the new law.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
