NYC Bans Employers From Requesting Salary History

May 18, 2017

On Thursday, May 4, 2017, Mayor Bill de Blasio signed into law a bill (Int. No. 1253-A) passed by the New York City Council on April 5, banning public and private employers and employment agencies in New York City from asking job applicants about, or otherwise relying on, their salary history and employee benefits in the interview process. The legislation formally amends Section 8-107 of the New York City Human Rights Law, which applies to New York City-based employers of four or more persons, and will be effective as of October 31, 2017.

The Details

The new measure builds upon the bans recently put into place by New York State and New York City regarding inquiries into salary history for public sector jobs. It reflects a desire to address wage disparities between men and women, and stem any residual discrimination that applicants may have faced in the past by providing previously underpaid applicants the ability to negotiate compensation packages with a blank slate.

Under the new law, “salary history” is broadly defined to include “current or prior wage, benefits or other compensation” but excludes “any objective measure of the applicant’s productivity such as revenue, sales, or other production reports.” N.Y. ADMIN. CODE § 8-107(25)(a) (2017). Once effective, it will be a discriminatory employment practice for an employer to (i) ask an applicant directly about his or her salary history or search publicly available records for such information, or (ii) rely on an applicant’s salary history in determining the applicant’s salary, unless the applicant “voluntarily and without prompting” discloses his or her salary history, in which case an employer is also allowed to use such information and verify the details. Id. §§ 8-107(25)(b), (d). An employer can, however, tell an applicant the expected salary or salary range for a particular position, and may discuss with an applicant any expectations he or she may have regarding compensation and benefits, including “unvested equity or deferred compensation that an applicant would forfeit or have cancelled by virtue of the applicant’s resignation from their current employer.” Id. § 8-107(25)(c). An employer may not rely on information relating to salary history that is disclosed during a background check. Id. § 8-107(25)(a).

The measure does not apply to internal job applicants applying for a transfer or a promotion, public employees whose salaries are determined by collective bargaining agreements, or where disclosure or verification of salary history is required or authorized by law. Id. § 8-107(25)(e). The New York City Commission on Human Rights will enforce the ban and investigate alleged violations, and has the authority to impose civil penalties of up to $250,000 for willful misconduct. Employers may also be liable for compensatory damages (front and back pay), punitive damages and attorneys’ fees and costs.

What Should Employers Do?

New York City’s ban tracks the mounting nationwide emphasis on pay-equity. Although New York is only the second city in the U.S. (Philadelphia being the first) to pass a ban on salary history inquiries, San Francisco and Pittsburgh both have measures pending, and more are to follow. Massachusetts has a ban in place, as does Puerto Rico, and almost 20 states and the District of Columbia have similar legislation introduced. A bill banning questions on salary history has already been introduced in Congress.

Although on its face the ban applies only to New York City-based employers and employees, there is a significant likelihood that this will affect companies that operate both in and outside of New York City. New York City-based employers should review their hiring practices and determine, what, if any, changes are necessary to comply with the new law. Any requests for salary history should be removed from job applications and online portals. Employees who are active in the recruitment of new employees should be informed of the ban and provided training for conducting interviews, including how to handle any voluntary disclosures of salary history. Similarly, employers should adopt internal procedures for how to handle disclosures of salary history during background checks.

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