Thursday, October 5, 2017

New York City Limits Salary History Inquiries

Can a NYC employer ask about a job applicant’s salary history? No

When it comes to hiring, one of the biggest challenges for many employers is negotiating a salary. In this regard, it is customary for employers, employment agencies and agents (an “Interested Employer”) to inquire about a job applicant’s salary history. However, many advocates of pay equality believe this practice puts women and people of color at a disadvantage and automatically steers them into lower salary levels.

To address this, New York City enacted legislation, which becomes effective on October 31, 2017, prohibiting NYC Interested Employers from inquiring about a job candidate’s salary history. The initiative, which is similar to laws that have been enacted in other jurisdictions, also prohibits NYC Interested Employers from relying upon or verifying a job candidate’s salary history to determine the salary and other forms of compensation to be offered.

NY City Salary History Law

The NYC Salary History Law prohibits NYC Interested Employers from inquiring about the salary history of a prospective job candidate during all stages of the hiring process.  "Inquire" is broadly defined to include any question or statement to a job candidate, his or her current or former employer, or the current or former employees or agents of such employer, in writing or any other form, concerning the job candidate’s salary history. The law also prohibits NYC Interested Employers from conducting searches of public records to determine a job candidate's salary history. NYC Interested Employers may conduct lawful background checks of job candidates but we recommend such background check exclude the salary history in order to avoid a potential conflict with this new law.

Although the term salary history includes current or prior wages, benefits or other compensation, it does not include metrics such as revenue, sales, or other production reports.  The NYC Commission on Human Rights recently issued an employer fact sheet and an employee fact sheet that describes key elements of the law. Employers should circulate the employer fact sheet to any of its personnel who touch the hiring process and consider providing candidates a copy of the employee fact sheet when they are provided an employment application.

The law does not prohibit a NYC Interested Employer from relying upon and verifying the salary history of a job candidate to determine his or her compensation package when a job candidate voluntarily discloses his or her current or prior salary. NYC Interested Employers are also permitted to discuss the salary expectations of the job candidate. These discussions may involve compensation packages the job candidate may lose if selecting one job over the other. 

Lastly, the new law does not apply to NYC Interested Employers acting in accordance with any local, state or federal law authorizing such disclosures.  It also does not apply to job candidates that are internally transferred or promoted from within their existing employer.

The Takeaway

NYC Interested Employers should take steps to ensure compliance with this new law. It is suggested that NYC Interested Employers (i) remove all references to salary history from employment applications, employment agreements and/or handbooks, as applicable; and (ii) provide training to hiring personnel regarding acceptable and unacceptable discussions concerning salary.

Whether the new measure will have an impact on pay inequities remains to be seen. In the meantime, NYC Interested Employers are well advised to seek the advice of an experienced business law attorney to ensure that they establish policies and procedures that comply with the NYC Salary History Inquiry Law.

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