Executive Summary: Starting October 31, 2017, a New York City law will make it illegal for employers to “inquire” into an applicant’s salary history. The law also prohibits employers who are aware of an applicant’s salary history from relying on that history in determining his or her compensation.
The new law states that an inquiry into salary history constitutes an unlawful discriminatory practice under the New York City Human Rights law. The legislation defines “inquire” broadly: it covers direct questions or statements to the applicant, but also questions or statements to the applicant’s current or former employer. It further prohibits an employer from conducting a search of publicly available records or reports for salary history. The law does allow an employer, however, to inquire into the applicant’s desired salary or salary range.
The pay history ban also deems any reliance on the salary history of an applicant when determining the “salary, benefits or other compensation for such application during the hiring process,” as an unlawful discriminatory practice.
However, neither the prohibition on salary history inquiry nor reliance on salary history will be deemed an unlawful practice where the applicant voluntarily and without prompting discloses his or her salary history. Note that there are certain limited exceptions to these new prohibitions, including applicants seeking an internal transfer or promotion.
Individuals may bring private civil actions for violations of the new law, or the New York City Commission on Human Rights may investigate and impose civil penalties up to $125,000 for an unintentional violation and up to $250,000 for a “willful, wanton, or malicious act.”
With this latest law, NYC joins other cities and states that have enacted similar bans, including Oregon (effective October 2017), Delaware (effective December 2017), and Massachusetts (effective July 1, 2018). Philadelphia’s pay ban was set to take effect May 23, 2017; however, in April 2017 the city agreed to stay the enforcement of the law pending a First Amendment challenge.
Bottom Line: Absent court challenge, employers should begin to review all application materials and job postings to ensure compliance by October 31, 2017. Employers should also ensure those involved with the interview process are familiar with the law so that all interviews are conducted in compliance with its requirements to further avoid liability.