Q. My company has employees in New York City. We often ask applicants about their salary history as a starting point for negotiating and setting a new salary. Are we still permitted to do this?
A. Effective October 2017, it will be unlawful for employers to ask job applicants in New York City about their salary history. Salary history includes “current or prior wage, benefits, or other compensation.” The ban includes inquiries to an applicant’s current or former employer and searches of publicly available information for salary history.
The new law provides that employers can still engage in discussion with an applicant about his/her expectations with respect to salary, benefits, and other compensation, so long as the employer does not inquire about salary history or rely on salary history for determining compensation. Employers can also continue to run background checks and verify an applicant’s disclosure of non-salary related information. However, if the verification or background check discloses the applicant’s salary history, then the employer cannot rely upon it for determining salary.
Prospective employees can volunteer salary history (so long as it is “without prompting”), and in those cases, the employer can consider salary history in determining salary, and can verify the applicant’s salary history.
The new legislation aims to combat pay inequity by preventing employers from perpetuating pay inequity applicants may have experienced in the past. Such legislation has also recently been passed by Philadelphia (effective May 2017), as well as in numerous other cities and states. In 2016, Mayor Bill de Blasio issued an executive order prohibiting New York City agencies from asking prospective employees about their pay history.
The Philadelphia and New York City laws have many similarities. Like the New York City law, the Philadelphia law broadly defines wages as “all earnings of an employee,” including fringe benefits, wage supplements and “other compensation.” The Philadelphia law is enforced by Philadelphia’s Commission on Human Relations, and the New York law is enforced by its equivalent agency, the New York City Commission on Human Rights. Both laws provide that applicants can volunteer salary history, in which case the employer can rely on it to determine the new salary.
To prepare for this law, employers should ensure that job applications for positions in New York City do not ask about salary history. Employers should also update their internal policies and interviewing guidelines to ensure all relevant personnel are aware of the change. Employers who have employees both in and outside of New York City should consider whether to make such changes company-wide, or only to applicants for New York City positions.