NYC bans salary history inquiries
Supporters say the law is a step toward gender pay equality
For New York City employers, it’s time to rework those standard interview questions. On May 4, New York City Mayor Bill de Blasio signed a bill into law prohibiting employers from inquiring about, or relying on, a prospective employee’s salary history.
Let’s take a closer look at what it means for hiring organizations.
Specifically, the law makes it an “unlawful discriminatory practice” for employers to inquire — in writing or otherwise — about the salary history of a job applicant, or to rely upon a job applicant’s salary history unless the applicant voluntarily discloses the information to a prospective employer.
The salary history ban is being touted as a step toward eliminating gender pay inequality. It’s intended to focus salary decisions in hiring upon an applicant’s skill and ability, and market compensation for the role without considering the applicant’s prior salary, which potentially was deflated due to discriminatory, gender-based considerations.
Supporters of the law believe it will stop perpetuating the discriminatory gender-based salary gap for similarly-situated job applicants. Opponents contend employers should not face blanket prohibitions on salary history inquiries, and wage disparities generally, which may be based upon legitimate, non-gender based factors such as prior job performance. The NYC ban contains two main prohibitions:
First, it is an unlawful discriminatory practice for employers to inquire about a job applicant’s salary history (which includes not only a current or prior wage, but benefits and all other forms of compensation): (a) from an applicant; (b) from the applicant’s current or prior employer; (c) from a current employee, former employee or agent of the applicant’s current or prior employer; or (d) by searching publicly available records or reports for information on the job applicant’s salary history.
However, an employer is permitted to discuss with an applicant her or his objective measures of productivity (e.g., sales or revenue generated), to discuss the applicant’s expectations as to salary, benefits and other compensation and to inform the applicant about proposed or anticipated salary or salary range.
Second, it is an unlawful discriminatory practice for an employer to rely on a job applicant’s salary history in determining the applicant’s compensation at any stage of the employment process unless the applicant, unprompted, willingly disclosed her or his salary history.
The NYC ban contains limited exceptions in circumstances where applicable law authorizes the disclosure or verification of salary history for employment purposes, and also does not preclude employers from verifying an applicant’s non-salary information and conducting background checks so long as any accom- panying disclosure of salary history is not relied upon for purposes of determining salary, benefits or other compensation during the hiring process. Additionally, the law is limited to job applicants, and does not facially apply to existing employees transferred or promoted to new internal positions.
New York City is among the first jurisdictions to enact legislation on salary history inquiries. Philadelphia and Massachusetts have introduced similar bans, and it is widely expected that a host of other cities and states will follow suit.
Speaking of suits, the Philadelphia law has recently been challenged by Philadelphia’s Chamber of Commerce, alleging a salary history ban violates businesses’ First Amendment (free speech) rights without demonstrating those employer inquiries actually perpetuate gender-based wage discrimination.
Although none of the NYC, Philadelphia or Massachusetts measures have taken effect yet, and despite the possible legal challenges ahead (many of which undoubtedly will focus on the tug of war between combatting gender-based discrimination and preserving an employer’s free speech rights), businesses are fore- warned to prepare for the ripple effect of this wave.
Like other prohibited employer inquiries that have garnered local and national attention — remember the “ban the box” movement to eliminate inquiries about an individual’s criminal history? — the salary history ban is gaining momentum.
New York City employers should immediately review and revise their form applications, interview processes (including training of those conducting interviews) and reference and background/credit check procedures to ensure the questions and topics covered do not implicate disclosure of an applicant’s salary history.
Non-NYC employers also should carefully follow this trend to make sure they are not caught flat-footed in the event a similar ban is imposed in their jurisdiction.
Additionally, employers must coordinate with engaged outside recruiters and placement firms to make sure they do not receive unauthorized disclosure of prohibited applicant information.
Marc Zimmerman chairs the labor and employment law practice at Phillips Nizer LLP.