The day has finally arrived. Yesterday, on October 31, 2017, a new law took effect prohibiting public and private employers of any size in New York City from inquiring about a job applicant’s salary history and/or relying on an applicant’s salary history to determine compensation for that applicant during the hiring process. The New York City Human Rights Law was amended in May 2017 in an effort to remedy pay disparities for women and minorities, following a trend at the city and state level across the United States.

Recently, the NYC Commission on Human Rights (“the Commission”) issued two fact sheets to address the responsibilities of employers and recruiters under the new law, as well as the rights of job applicants. The law does not prohibit employers from asking job applicants about their salary expectations, but employers should proceed with caution to avoid any inquiries that could be viewed as prompting applicants to disclose their salary history. Employers may also consider salary history information that an applicant voluntarily discloses without prompting. The law does not apply to promotions or internal transfers, or to employment positions in the public sector where an applicant’s salary is determined by procedures governed by a collective bargaining agreement.

New York City recently provided guidance on how this law affects corporate acquisitions, stating that in the context of an acquisition the employees of the target company are not “job applicants” for the purposes of the salary history law. Based on this guidance, it appears that the City is taking the position that acquiring companies may seek and rely on salary history information when hiring or absorbing employees from a target company and making compensation and structural decisions on a non-individualized basis. However, if employees of the target company are considered by the acquirer on an individualized basis (i.e., asked to interview for positions with the acquiring company), the salary history law may be implicated.

The Commission is clearly taking a strong stance on this issue as noncompliance with the salary history ban could expose violators to a penalty of up to $125,000 for an unintentional violation and up to $250,000 if the violation is willful and malicious. Additionally, individuals may recover back pay, front pay, compensatory damages and attorney’s fees if they are successful in a civil lawsuit.

If employers haven’t taken action yet, here are a few things to consider:

  • Remove any and all questions relating to salary history from job applications.
  • Train management and your HR team to conduct the hiring process in a manner compliant with the new law.
  • Communicate restrictions under the law in writing to recruiters or other third parties who participate in the hiring process on an employer’s behalf.
  • Take contemporaneous notes during the interview process to record questions and answers.
  • Reevaluate personnel reference policies to ensure that salary information is not shared to prospective employers of former employees.

Given the novelty of the law, we will continue to keep readers posted on the ban as further developments arise.