New York City Employers Should Prepare for Salary History Ban Taking Effect on October 31
New York City’s new ban on inquiries concerning salary history will take effect on October 31, 2017. According to the law signed by Mayor de Blasio this spring, it will be considered an unlawful discriminatory practice for any employer to inquire about the salary history of a job applicant or to use the applicant’s prior salary and/or benefits as a benchmark to negotiate compensation.
Impact on Employers
This new law applies to all public and private employers in New York City regardless of size. It prohibits direct and indirect inquiries about past salary and employee benefits, whether from former employers, publicly available sources, or the applicant directly. This is part of a recent trend that includes similar laws passed in Delaware, Massachusetts, Oregon, Philadelphia and San Francisco.
The stated goal of the new law is to find more practical ways to ensure that women and people of color are paid at the same rate for the same work as their white male counterparts. The New York City council sponsors of the bill believe that banning inquiries on salary history will help to minimize the perpetuation of such pay differences when employees change jobs, and allow prospective employees greater leverage in salary negotiations.
Violations could subject the employer to civil suit by the applicant seeking back pay, emotional distress, and compensatory damages. The New York City Commission on Human Rights, the city agency charged with enforcing discrimination laws, also may bring an enforcement proceeding and may impose fines of up to $125,000 for inadvertent violations and up to $250,000 for willful violations.
What the New Law Does/Does Not Allow Employers to Do
- Employers may not make any inquiry from any source about the salary, bonus, and benefits the applicant was earning at prior employment.
- Employers may discuss their salary, bonus, and benefits expectations with the applicant and discuss the anticipated compensation range the applicant is seeking.
- If the applicant volunteers past compensation information without any prompting from the employer, the employer may consider salary history in determining compensation for the applicant, and the employer may verify such applicant’s salary history.
How Employers Can Prepare
Employers hiring employees in New York City should:
- Be careful to remove past compensation and benefit inquiries from job application forms and other hiring documents
- Review interview “do’s” and “don’ts” with all those who will be conducting interviews on the employer’s behalf. Since refraining from asking about prior salary is such a marked change from existing practice, training interviewers will be a key to ensure compliance and to avoid potentially hefty fines.
- Carefully document all voluntary disclosures by applicants to avoid later claims that the employer pried the information from the applicant.
- Because increased scrutiny of the application process may be expected in November, employers should take this time to review hiring documents and procedures for compliance with other discrimination laws, including laws limiting and/or prohibiting criminal background checks and credit checks, and those governing use of information concerning age, sexual orientation, marital status, and national origin in the hiring process.
For questions about the Salary History Ban and how best to prepare, contact:
Robert J. Tracy
Labor and Employment