May 16, 2017 Employment Discrimination

New York City Bans Employers From Inquiring About the Salary History of Job Applicants

On May 4, 2017, Mayor Bill de Blasio signed into law a bill prohibiting New York City employers from inquiring about an applicant’s prior salary history. (See Intro No. 1253-A.) This new law will take effect on October 31, 2017.

Supporters of this new law explain that it is intended to address the gender pay gap because (a) an individual’s prior compensation is often a benchmark for his or her starting pay with a new employer; and (b) by restricting questions regarding such compensation and reliance on such information, the law “can reduce the likelihood that women will be prejudiced by prior salary levels and help break the cycle of gender pay inequity.” (See Intro. 1253-A Summary). A similar law has been passed in Massachusetts and is scheduled to take effect in July 2018.[1]

Key Provisions of This New Law:

Under this new law, it is now an unlawful discriminatory practice under the New York City Human Rights Law for an employer, employment agency, or employee or agent thereof (“employer”) to inquire about the salary history of an applicant for employment by either:

•  a question or statement communicated in any manner to an applicant or his or her current or prior employer (or their current or former employees or agents) for the purpose of obtaining an applicant’s salary history; or

•  a search of publicly available records or reports for the purpose of obtaining an applicant’s salary history.

Further, the law also prohibits employers from relying on the salary history of an applicant in determining the salary, benefits, or other compensation for such applicant during the hiring process, including the negotiation of a contract.

For purposes of this law, an applicant’s “salary history” includes his or her current or prior wages, benefits, or other compensation. It does not, however, include any objective measure of the applicant’s productivity such as revenue, sales, or other production reports.

Notably, this new law does not prohibit an employer from:

  • informing an applicant about the position’s proposed or anticipated salary or salary range; or
  • engaging in discussion with the applicant about his or her expectations with respect to salary, benefits, and other compensation, including but not limited to unvested equity or deferred compensation that an applicant would forfeit or have canceled by virtue of the applicant’s resignation from his or her current employer, so long as the employer does not inquire about salary history.

However, if an applicant voluntarily and without prompting discloses salary history to an employer, the employer may: (1) consider such salary history in determining salary, benefits, and other compensation for such applicant; and (2) verify such applicant’s salary history.

Additionally, the restrictions in this new law do not apply to:

  • any actions taken by an employer pursuant to any federal, state, or local law that specifically authorizes the disclosure or verification of salary history for employment purposes, or specifically requires knowledge of salary history to determine an employee’s compensation;
  • applicants for internal transfer or promotion with their current employer;
  • any attempt by an employer to verify an applicant’s disclosure of non-salary-related information or conduct a background check. However, if such verification or background check discloses the applicant’s salary history, such disclosure shall not be relied upon for purposes of determining the salary, benefits, or other compensation of the applicant during the hiring process, including the negotiation of a contract; or
  • public employee positions for which salary, benefits, or other compensation are determined pursuant to procedures established by collective bargaining.

If an employer violates the restrictions in this new law, the New York City Commission on Human Rights could impose penalties of up to $125,000 for violations, and up to $250,000 for violations that are the result of willful, wanton, or malicious conduct. An employer could also be subject to a private civil action, where the relief awarded to a successful plaintiff could include back pay, front pay, compensatory and punitive damages, and attorneys’ fees.

Next Steps:

Prior to October 31, 2017, New York City employers should take the following steps:

  • Review their employment applications and other pre-employment materials to ensure that they do not request salary history from applicants in violation of this new law.
  • Update any interview questions and guidelines (or other pre-employment inquiry materials) to comply with the salary history restrictions in this new law.
  • Train their Human Resources staff and other individuals involved in the hiring process regarding the salary history inquiries that are now prohibited by this law.
  • Confirm that any of their outside recruiters are aware of the restrictions in this new law.

Please do not hesitate to contact any of our attorneys if you have questions regarding this new law or the steps your company may need to take to comply with this new law’s restrictions.

[1] A similar law was also passed in Philadelphia; however, its enforcement has temporarily stayed pending a lawsuit challenging the law.