On May 4, 2017, NYC Mayor Bill de Blasio signed Introduction 1253-2016 into law, which amends the NYC Human Rights Law. Employers will be banned from (1) asking applicants about their salary history during the hiring process or (2) relying upon this information in determining the amount of compensation to offer a prospective employee. According to a press release from the NYC Council, the law is aimed at reducing the salary gap between men and women, helping to break the cycle of gender pay inequality. The hope is that employers will set salaries based upon factors such as resources and market rates, rather than a prospective employee’s prior salary. The new law goes into effect on October 31, 2017. Both Massachusetts and Philadelphia have recently enacted similar laws, which will take effect later this year and in 2018.
It is now “an unlawful discriminatory practice” for an employer in NYC to make any salary history inquiries during a job interview; a recruiter is not allowed to ask, “what are you currently making?” Likewise, an employer is banned from making salary inquiries to an applicant’s current or prior employer or obtaining this information when conducting pre-employment background searches. In this regard, we expect that vendors conducting background searches in NYC will exclude this information from their reports. (Notably, “salary history” includes the applicant’s fringe benefits and other compensation, but it specifically excludes any objective measure of the applicant’s productivity such as revenue, sales, or other production reports.)
Under the new law, employers are permitted to discuss compensation and benefits with applicants, so long as they do not inquire about salary history. For example, an employer may discuss an applicant’s expectations regarding unvested equity or deferred compensation that an applicant would forfeit if an applicant resigned his or her current employment. Further, an employer may inform an applicant of the compensation range of the open position and may ask an applicant for his or her expected salary. The new law also provides that if an applicant volunteers his or her prior or current salary “without prompting”, then the employer may lawfully consider and verify it.
Applicants who believe that an employer has violated their rights under this law can file a complaint with the NYC Human Rights Commission or choose to bring a civil lawsuit. All available remedies under the NYCHRL will be available including, back pay and attorneys’ fees. The Commission will also be authorized to impose monetary penalties.
The Bottom Line. Employers should review their hiring practices and update their job applications to eliminate inquiries regarding salary history. Employees involved in recruitment should also be trained on the new law’s requirements and how to avoid claims of improper inquiries regarding salary history. We also recommend implementing processes for documenting voluntary disclosures of the applicant’s current or prior salary. On the bright side, this may be an opportunity for employers to evaluate their compensation systems to ensure equal pay.