New York City Is Poised to Prohibit Inquiries Into Salary History

On April 5, 2017, the New York City Council passed a bill (“Bill”) that would amend the New York City Human Rights Law (“NYCHRL”) to prohibit all New York City employers[1] from (i) requesting a job applicant’s salary history or (ii) using a job applicant’s salary history to determine the salary, benefits, or other compensation for such applicant during the hiring process, including the negotiation of a contract. Mayor Bill de Blasio is expected to sign the Bill, which would become effective 180 days thereafter. New York City follows Philadelphia[2] and Massachusetts[3] in seeking to improve pay equity by banning inquiries into salary history on the basis that such inquiries perpetuate the wage gap based on historical pay discrimination.[4]

Prohibited Practices and Definitions

Under the Bill, it would be unlawful for an employer to inquire about the salary history of an applicant for employment. “Salary history” is defined broadly and includes wages, benefits, or other compensation. “Salary history,” however, does not include any objective measure of the applicant’s productivity, such as revenue, sales, or other production reports. Under the Bill, the term “to inquire” is defined broadly to mean “to communicate any question or statement to an applicant, an applicant’s current or prior employer, or a current or former employee or agent of the applicant’s current or prior employer, in writing or otherwise.”

Employers would also be prohibited from conducting a search of publicly available records or reports to seek salary history. The Bill applies to private and public employers of all sizes.

Permissible Activities

Importantly, an employer may still:

• inform the applicant in writing or otherwise about the position’s proposed or anticipated salary or salary range;
• engage in a discussion with the applicant about his or her expectations with respect to salary, benefits, and other compensation;
• inquire about unvested equity or deferred compensation that an applicant would forfeit or have cancelled by virtue of the applicant’s resignation from his or her current employer;
• consider the prior salary of a current employee who is seeking an internal transfer or promotion; and
• perform a background check, so long as:
  • the check does not include a request for, or confirmation of, prior salary history, and
  • the employer does not, if the background check does disclose such information, utilize same for purposes of determining the salary, benefits, or other compensation of the applicant.

Voluntary Disclosure

Under the Bill, if an applicant voluntarily and without prompting discloses salary history information to an employer, then the employer could consider salary history in determining salary, benefits, and other compensation for such applicant. The employer could also verify the applicant’s voluntarily disclosed salary history. However, the employer should ensure that any disclosure of salary information is truly voluntary and unprompted.

Exemptions

The restrictions under the Bill would not apply if federal, state, or local law specifically authorizes the disclosure or verification of salary history for employment purposes, or specifically requires knowledge of salary history to determine an employee’s compensation.

Enforcement

The Bill would be enforced by New York City’s Commission on Human Rights (“Commission”). An employee alleging a violation of the Bill could either bring a complaint with the Commission or proceed directly to court. As with other claims brought under the NYCHRL, actions would need to be brought to the Commission within one year or filed in court within three years of the alleged violation.

Under the NYCHRL, civil penalties may be imposed for violations, with greater penalties (up to $250,000) available for willful, wanton, or malicious acts. If a claim were brought in court, the plaintiff could seek damages, including punitive damages, injunctive relief, attorneys’ fees, and costs. 

What New York City Employers Should Do Now

If the Bill becomes effective, New York City employers should do the following:

• Remove questions about salary history from employment applications, background check forms, and any other applicable forms or policies used during the hiring process.
• Unless an applicant has voluntarily disclosed salary history information, do not seek salary history during the background check process[5] to make sure that such information is not used in determining compensation.
• Coordinate with any outside background-checking vendors to ensure that background check forms do not request salary history and that a vendor does not request salary history when confirming prior employment.
• Confirm that external recruiters are complying with the Bill when seeking applicants for jobs in New York City.
• Train human resources staff, internal recruiters, hiring managers, and any other individuals involved in the hiring process (i.e., those conducting interviews or setting compensation levels at the organization) on the requirements of the Bill.
• Make certain that any interviewers who will inquire about an applicant’s compensation expectations explicitly state that the inquiry pertains to the applicant’s compensation expectations for the given role and does not relate to his or her current or past salary.
• Ensure that any disclosure of salary history is done on a purely voluntary basis. If an applicant voluntarily discloses salary history information at any point during the hiring process, create a “memo to file” (or other internal documentation) noting that the applicant voluntarily disclosed this information and the circumstances surrounding such disclosure.

ENDNOTES

[1] Since December 4, 2016, public employers in New York City have been prohibited from making such inquiries.

[2] The Chamber of Commerce for Greater Philadelphia filed a lawsuit on April 6, 2017, challenging this law, which is set to take effect on May 23, 2017.

[3] Aside from these jurisdictions, several other states, cities, and the District of Columbia have proposed similar laws. A similar law was previously proposed in the U.S. Congress and is expected to be reintroduced later this year.

[4] Indeed, Letitia “Tish” James, New York City Public Advocate and sponsor of the Bill, recently noted that “being underpaid once should not condemn you to a lifetime of inequity.”

[5] Employers should keep in mind that the New York City Fair Chance Act prohibits employers with four or more employees from conducting criminal background checks prior to making a contingent offer of employment. For more information on this law, please see our Act Now Advisory titled “Now That New York City’s Credit Check and “Ban the Box” Laws Are in Effect, How Do Employers Comply?”