In a recent change in legislation by New York City, private and public employers are to be prohibited from inquiring about a job applicant’s salary history. Legislators have stated they hope the regulation will assist in closing the pay gap experienced by women and people of color. The legislation was passed by the City Council on Wednesday, April 5, 2017, in a 47-3 vote. The bill will be enacted 180-days following the expected signature of Mayor Bill de Blasio.
Under the new regulation, employers located in New York City are prohibited from 1) inquiring about an applicant’s salary history; or 2) relying on an applicant’s salary history in determining the salary, benefits, or other compensation for that applicant, including as part of the negotiation of an employment contact. The bill defines an applicant’s “salary history” as information including or referencing past or current wages, benefits, and other compensation. Further, the bill defines an “inquiry” as any question or statement regarding an applicant’s salary history, which is directed to the applicant, the applicant’s current and former employers, and any employee or agent of the applicant’s current and former employers. Moreover, employers will be prohibited from utilizing public records to determine an applicant’s salary history.
Employers found to violate the new law may be fined by the New York City Commission on Human Rights in an amount ranging from $125.00 to $250,000. Additionally, those applicants that are individual affected may seek damages against an employer, which may entitle the applicant to back pay, front pay, punitive damages, and attorneys’ fees.
While employers may be prohibited from inquiring into an applicant’s salary history, applicants will still be permitted to voluntarily disclose their salary history. However, employers must still tread carefully even where an employee voluntarily discloses his or her salary history, as employers are still prohibited from relying on an applicant’s salary history in determining the salary, benefits, or other compensation for the applicant. Additionally, the employer would face a difficult burden in demonstrating that the applicant freely and willingly disclosed his or her salary history.
While the legislation is expected to be broadly enforced, there are several narrow exceptions under the bill’s current iteration. First, employers may still inquire and rely upon salary history of its current employees for the purposes of a transfer or promotion. Second, the law does not apply to public employees whose salaries are subject to a collective bargaining agreement. Third, employers will not be punished if a non-salary related background check reveals an applicant’s salary history, so long as the information is not relied upon in determining the applicant’s salary, benefits or other compensation. Fourth, employers will not be prohibiting from inquiring as to an applicant’s unvested equity or deferred compensation that the applicant would forfeit by accepting new employment, so long as the inquiry is related to a discussion of the applicant’s salary expectations.
Employers outside of New York City should remain attentive to the developments as well, as those supporting the newly passed bill are calling for the enactment of a similar law across the State of New York. Those employers affected by such prohibitions should review the permissibility of their job applications as well as the procedures utilized in the hiring and interview process.
