On May 4, 2017, New York City Mayor Bill de Blasio signed, into law, Local Law 67 of 2017 (“Local Law 67” or the “new Law”), which, effective October 31, 2017, prohibits employers from inquiring about a prospective employee’s salary history during all stages of the interview process. If an employer already knows of a job applicant’s salary history, Local Law 67 prohibits the employer from relying on that information in determining the applicant’s compensation.
According to the new Law’s Summary, the new Law’s rationale is that, on average, women are paid less than men for the same work, and that “rely[ing] on salary histories . . . [in] determin[ing] compensation . . . perpetuat[es] th[is] gender wage gap.” That is, Local Law 67’s stated purpose is to “reduce the likelihood that women will be prejudiced by” their salaries at previous jobs, and “to help break the cycle of gender pay inequity.”
On April 5, 2017, the New York City Council, by a vote of 47-3, had approved Local Law 67.
The New Law’s Provisions
Local Law 67 renders it an “unlawful discriminatory practice” for an employer, an employment agency, or an employer’s or employment agency’s employee or agent (i) “to inquire” about the “salary history” of an applicant for employment or (ii) to rely on the “salary history” of a job applicant in determining the salary, benefits or other compensation for that applicant during the hiring process, including the negotiation of a contract.
The new Law defines the term ” ‘to inquire’ ” as “to communicate any question or statement to a [job] 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, for the purpose of obtaining an applicant’s salary history, or to conduct a search of publicly available records or reports for the purpose of obtaining an applicant’s salary history.” Local Law 67 excludes, from the definition of the term ” ‘to inquire,’ ” “informing the applicant in writing or otherwise about the position’s proposed or anticipated salary or salary range.”
Local Law 67 specifies that the term ” ‘salary history’ ” “includes the [job] applicant’s current or prior wage, benefits or other compensation.” The new Law excludes, from the definition of the term ” ‘ salary history,’ ” “any objective measure of the applicant’s productivity such as revenue, sales, or other production reports.”
The new Law preserves two permitted categories of actions by employers. First, an employer, an employment agency, or an employer’s or employment agency’s employee or agent lawfully may, without inquiring about salary history, “engage in discussion with the [job] applicant about [his or her] expectations” about salary, benefits and other compensation, “including but not limited to unvested equity or deferred compensation that an applicant would forfeit or have cancelled by virtue of the applicant’s resignation from their current employer.”
Second, where a job applicant “voluntarily and without prompting discloses” salary history to an employer, an employment agency, or an employer’s or employment agency’s employee or agent, Local Law 67 authorizes that employer, agency, or employer’s or agency’s employee or agent to “consider” salary history in determining salary, benefits and other compensation for that job-seeker, and to “verify” that job-seeker’s salary history.
Local Law 67 exempts from its prohibition of employers from inquiring about a prospective employee’s salary history during the interview process, the following:
- Actions taken by an employer under any federal, state or local law that 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; and
- Attempts by employers to verify a prospective employee’s disclosure of non-salary related information or conduct a background check. However, if that verification or background check discloses the prospective worker’s salary history, then the employer may not rely on the disclosed salary history in determining, during the hiring process (including the negotiation of a contract), the prospective employee’s salary, benefits or other compensation.
Further, the new Law does not protect, from inquiries by employers about salary history, (i) individuals applying, with their current employer, for internal transfer or promotion, or (ii) persons applying for government jobs for which salary, benefits or other compensation are determined under procedures set forth in a collective bargaining agreement.
The new Law is codified as section 8-107(25) of the New York City Human Rights Law, N.Y.C. Admin. Code §§ 8-101 – 8-131.
Job applicants whom, during any stage of the interview process, employers subject to inquiries about their salary history, like employees aggrieved by other discriminatory practices made unlawful by the New York City Human Rights Law, may sue the employers for and may recover, among other remedies, non-capped compensatory damages, punitive damages, and, if they prevail and at the court’s discretion, costs and reasonable attorney’s fees. See N.Y.C. Admin. Code § 8-502(a), 8-502(g).
An Emerging Trend
With the enactment of Local Law 67, New York City becomes the fourth city, state, or U.S. territory to ban employers from asking salary history questions of prospective employees during the interview process. All of these jurisdictions have passed these bans within the past twelve months.
In 2016, Massachusetts prohibited salary history inquiries to job applicants, effective July 2017. In January 2017, the City of Philadelphia banned such questions, effective April 2017; however, the City of Brotherly Love has agreed to temporarily stay enforcement of that City’s ordinance. In March 2017, the Commonwealth of Puerto Rico prohibited such inquiries, effective immediately.
Take-Aways For Employers
Before Local Law 67’s October 31, 2017 effective date, employers in New York City must review and modify their employment application forms to eliminate questions about job applicants’ salary histories. So, too, businesses in New York City should train supervisors and managers concerning the employer’s and the trainees’ obligations not to ask about prospective employees’ salary histories during the interview process.
Employers should establish procedures to document any voluntary disclosures, by job applicants to the employers, of the applicants’ salary histories.
Moreover, in interviewing prospective employees, businesses should consider moving from asking about salary history to (i) informing the prospective employees about the job’s proposed or anticipated salary or salary range and/or (ii) discussing, with the prospective employees, the prospective employees’ expectations about salary, benefits and other compensation.
If your company needs assistance or guidance on a labor and employment issue and your company is located in the New York City area, call Attorney David S. Rich at (212) 209-3972.