On May 4, 2017, New York City Mayor Bill de Blasio signed into law a bill that will go into effect on October 31, 2017, and generally prohibits employers from inquiring about or relying on an applicant’s salary history. New York City joins a number of jurisdictions with laws intended to limit the use of salary history to determine compensation in order to break the gender wage-gap cycle.

Subject to certain exceptions, the law prohibits an employer from (i) inquiring about an applicant’s salary history or (ii) relying on salary history in determining the salary, benefits, or other compensation of an applicant during the hiring process. The law defines inquiry to include, among other things: (i) communicating any question or statement to an applicant or his or her current or former employer for the purpose of obtaining an applicant’s salary history or (ii) conducting a search of publicly available records for the purpose of obtaining an applicant’s salary history. Salary history is broadly defined to include wages, benefits, or other compensation. The New York City Commission on Human Rights is authorized to promulgate implementing rules but has not yet done so.

Although the law’s prohibitions are broad, it is important to note what employers are permitted to do. For instance, an employer may inquire about objective measures of an applicant’s productivity like revenues or sales. Alternatively, an employer may inform an applicant about the position’s proposed salary or salary range and, without inquiring about salary history, discuss an applicant’s expectations with respect to salary, benefits, and other compensation. An employer may also, without inquiring about salary history, discuss unvested equity or deferred compensation that the applicant would forfeit as a result of the applicant’s resignation from his or her current employer.

Although employers are generally prohibited from considering salary history, there are a couple of limited circumstances under which they may do so. For example, an employer may consider and verify salary history in determining salary, benefits, and other compensation where an applicant voluntarily and without prompting discloses salary history to a prospective employer. An employer may also consider the salary history of a current employee in connection with an internal transfer or promotion.

Practice Points:

Employers should consider instructing their HR departments and hiring managers to focus on salary expectations for a position rather than the salary history of the applicant.

Employers should communicate these new restrictions to any staffing companies they use so that the staffing companies do not improperly provide the employer applicant salary history.

Employers should consider including (i) a notice in their interview materials instructing their HR departments and hiring managers not to inquire about salary history and (ii) space in their interview materials for their HR departments and hiring managers to document if an applicant voluntarily and without prompting discloses salary history.

Employers should remove questions related to salary history from their application materials for applicants being hired from and for New York City.