On October 31, 2017, a new law goes into effect that prohibits employers in New York City from asking about, relying on, or verifying a job applicant’s salary history during the hiring process. This new law amends the New York City Human Rights Law and makes any violation of the law an “unlawful discriminatory practice.” The practical effect is that unhappy applicants will now have a new claim to pursue against employers, with either the New York City Commission on Human Rights or directly in court.

What is Prohibited

The new law prohibits employers from:

  1. “Inquiring about” an applicant’s salary history throughout the entire employment process; and/or
  2. "Relying on" the salary history of a job applicant when determining an applicant’s salary amount at any stage in the employment process, including when negotiating a contract.

The law defines “salary history” broadly to encompass not just wages but also benefits and any other form of compensation. Similarly, the definition of “inquiring about” extends beyond mere inquiries into salary history but also bans employers from searching publicly available records to obtain an applicant’s salary history.

What Is Permissible

The new law allows employers to:

  1. Discuss with an applicant the proposed or anticipated salary for the position, as well as an applicant’s salary expectations;
  2. Inquire about “objective measures” of an applicant’s productivity, which could include expectations concerning revenue or sales attributable to the applicant;
  3. Discuss whether the applicant will be forfeiting equity or deferred compensation by taking the positon; and
  4. Consider an employee’s salary history if the applicant’s disclosure is made “voluntarily and without prompting.”

The law does not prohibit an employer from considering the prior salary history of a current employee who is seeking an internal transfer or promotion.

Penalties for Noncompliance

Pursuant to New York City Administrative Code § 8-126, when the New York City Commission on Human Rights finds an unlawful discriminatory practice, it may impose a civil penalty of up to $125,000 for an unintentional violation and up to $250,000 if the violation is willful and malicious. In addition to civil penalties, an individual who is successful in a civil lawsuit may recover back pay, front pay, compensatory damages and attorney’s fees.

Complying with the New Law - In advance of the law’s October 31, 2017 effective date, employers should:

  1. Review and revise all hiring documents, employment applications, background check forms, or any other forms used during the hiring process to ensure that there are no inquiries regarding salary history.
  2. Review advertisements, job postings and all social media posts to make sure there are no requests for salary history.
  3. Inform not only recruiting and those in HR, but all persons who are involved in the interview and hiring process, not to directly question or “prompt” an applicant to discuss their salary history.
  4. Communicate these new restrictions to third parties or outside vendors who participate in the hiring process, such as placement firms, temp agencies and recruiters and confirm that contractors and vendors are in compliance with the law. We recommend that employers notify and instruct these third parties in writing, so that employers have proof that contractors were properly notified..

Due to the growing trend of local and state legislatures enacting similar laws, employers who have offices in multiple states should consider making company-wide changes regarding salary history inquiries during the hiring process. Other than New York City, legislation banning salary history inquiries has been enacted in Oregon, Delaware, San Francisco, Massachusetts and Puerto Rico. Philadelphia has also enacted an ordinance prohibiting inquiries into salary history; however, the ordinance is currently being challenged in federal court.