New York City is on the verge of joining a growing list of jurisdictions that, in an effort to address pay equity issues, have prohibited employers from inquiring about a job applicant's salary history during the hiring process.
On April 5, the New York City Council passed legislation outlawing salary history inquiries. New York City Mayor Bill de Blasio is expected to sign the bill into law, which would take effect 180 days thereafter. Once enacted, the new legislation will impose significant changes on the hiring process.
The New York City bill would make it an unlawful discriminatory practice for an employer to inquire about a prospective applicant's salary history during all stages of the employment process. In addition, the bill would make it an unlawful discriminatory practice to rely on a job applicant's salary history in determining the applicant's salary, benefits or compensation.
The bill includes several notable exceptions.
- The ban does not bar employers from considering salary history in determining the applicant's salary or compensation if the applicant has "voluntarily and without prompting" disclosed his or her salary.
- Employers also remain free to "engage in discussion" with an applicant about his or her "expectations with respect to" salary and compensation, "including but not limited to unvested equity or deferred compensation that an applicant would forfeit or have cancelled by virtue of the applicant's resignation from their current employer."
- Employers are still permitted to conduct background checks of applicants, but if such background check discloses an applicant's salary history, the employer may not rely on such disclosure for purposes of determining an applicant's compensation.
- The ban on salary inquiries would not extend to applicants for internal transfers or promotion with their current employer, or to public employees whose salary or compensation is determined under a collective bargaining agreement.
Employers should take the following steps now to prepare for compliance with the law:
- Remove salary history questions from job application materials, as well as from background checks or other verification inquiries
- Instruct HR and other employees who interact with job applicants not to inquire about an applicant's salary history
- Instruct HR and other employees who interact with job applicants to memorialize, in writing, if an applicant voluntarily discloses his or her salary history
Stay tuned for more updates, advice and guidance from the DLA Piper Employment group on recent trends in pay equity issues nationally and the dangers for employers in relying on past salary for setting current salary in the recruiting process.