Rethinking Salary History Inquiries in New York City

Labor & Employment @lert

Date: October 24, 2017

Key Notes:

  • Effective October 31, 2017, employers, employment agencies and their agents (employers) in New York City (NYC) will generally be prohibited from inquiring about an applicant’s salary history.
  • The new law also will prohibit NYC employers from relying on an applicant’s salary history when making salary or benefits decisions.
  • NYC employers will not be prohibited from relying on salary history information when making salary or benefits decisions for internal applicants seeking a promotion or transfer.

According to the New York City Council’s (Council) website, “[w]hen employers rely on salary histories to determine compensation, they perpetuate the gender wage gap.” With the stated goal of “reducing the likelihood that women will be prejudiced by prior salary levels,” the Council passed a bill that generally prohibits New York City employers from inquiring about an applicant’s salary history or relying on such information when making salary or benefits decisions during the hiring process. Section 8‑107(25) of the Administrative Code of the City of New York (NYC Law) takes effect on October 31, 2017, adding New York City to a handful of jurisdictions, such as California and Massachusetts, that have passed similar laws. This alert provides a brief overview of the NYC Law and identifies some steps prudent employers are taking to prepare for its implementation.

Inquiring About the Salary History of an Applicant for Employment

The NYC Law makes it an “unlawful discriminatory practice” for an employer to “inquire about the salary history of an applicant for employment.” The NYC Law defines the term, “to inquire,” broadly, including conduct such as questions asked of or statements made to an applicant or the applicant’s former or current employer for the purpose of obtaining the applicant’s salary history. Under the NYC Law, “inquiries” also include searches of publicly available records made for the purpose of determining or obtaining the applicant’s salary history. The NYC Law does not, however, prohibit employers from engaging in discussions with applicants about their expectations regarding salary, benefits and other compensation for the position.

Relying on the Salary History of an Applicant When Determining Salary and Compensation

The NYC Law also makes it an “unlawful discriminatory practice” for an employer to “rely on the salary history of an applicant in determining the salary, benefits or other compensation for such applicant during the hiring process.” For the purposes of the NYC Law, the hiring process expressly includes relying on salary information learned during background checks and during contract negotiations. At the same time, the NYC Law does not prohibit employers from relying on unsolicited information unilaterally volunteered by the applicant when making salary and compensation determinations. Further, when an applicant volunteers such information without prompting, the employer is permitted to verify the applicant’s salary history. It is also worth noting that the NYC Law does not prohibit employers from relying on salary information for current employees who are internal applicants for transfer or promotion.

Preparing for the NYC Law

Prior to the effective date of October 31, 2017, employers should revisit their hiring and onboarding processes to ensure that they are compliant with the NYC Law. In particular, employers should consider revising applications and materials seeking salary information. In addition, employers should establish a set of procedures for discussing applicants’ expectations for salary and compensation and create a system for documenting the voluntary and unprompted disclosure of salary information. Where applicable, employers may also wish to review the types of information they seek when conducting background checks and remove any publicly available salary information.

FOR MORE INFORMATION

For more information, please contact:

Nancy M. Barnes
216.566.5578
Nancy.Barnes@ThompsonHine.com

Jason Carruthers
404.541.2955
Jason.Carruthers@ThompsonHine.com

or any member of our Labor & Employment group.

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