UPDATE: On May 4, 2017, Mayor de Blasio signed this bill into law. It will take effect on October 31, 2017.  

The New York City Council has approved a bill that makes it an “unlawful discriminatory practice” for employers to inquire about the salary history of a prospective employee, or to rely upon salary history unless the applicant offers the information voluntarily.  The legislation is aimed at eliminating what supporters say is one of the reasons the wage gap between men and women is perpetuated.  The new law will take effect 180 days after Mayor de Blasio signs it, which is expected shortly, as the Mayor has publicly expressed his approval of the legislation. 

What the NYC Law Provides

No Inquiry About Salary History.  The legislation amends the New York City Human Rights Law by adding a provision that makes it an “unlawful discriminatory practice” for an employer to make any salary inquiry of an applicant, or the applicant’s current or former employer, or a current or former employee or agent of the applicant’s current or prior employer.  An employer is also prohibited from conducting any form of search through publicly available information for a prospective employee’s salary history.  “Salary history” includes not only an applicant’s current or prior wage, but also benefits and any other form of compensation he or she may have received.   

No Consideration of Salary History in Setting Compensation.  The law also makes it an unlawful discriminatory practice for an employer to consider an applicant’s salary history in determining the salary, benefits, or other forms of compensation for that applicant.  However, if an applicant voluntarily and without prompting provides salary history, then this information can be used to determine the salary, benefits, and other compensation, and the employer may verify the salary history.                         

Employer and Applicant Can Talk About Salary.  The law does not prohibit the employer and the applicant from talking about salary and other compensation and benefits being offered.  The employer can inform the applicant about the anticipated salary of the position to which the applicant has applied, and can inquire about and discuss the applicant’s salary expectations, including whether any unvested equity or deferred compensation would be forfeited by the applicant for leaving the current employer.  The employer also can inquire about “objective measures” of the applicant’s productivity, which could include reports concerning revenue or sales attributable to the applicant.

Enforcement

The New York City Commission on Human Rights, the agency charged with enforcing the NYC Human Rights Law, will be enforcing this new provision. The Commission may impose a civil penalty of up to $125,000 for an unintentional violation, and up to $250,000 for a “willful, wanton or malicious act.” In addition, an individual may bring a civil lawsuit for violations of the law.  The full range of relief available under the New York City Human Rights Law will be available in such a lawsuit, including backpay, compensatory damages, and attorneys’ fees.

Next Steps for NYC Employers

Employers should start reviewing their policies and hiring practices to be certain that questions regarding salary history are eliminated and that written policies fully conform to the expectations of the law.  Human Resources personnel, recruiters, and anyone else involved in the recruiting and hiring process must be trained as to the law’s requirements, including ways to avoid claims that salary history was disclosed involuntarily or at the prompting of the interviewer. For example, an employer could develop a process for documenting when an applicant voluntarily discloses salary history and other compensation information.

The new law also provides an opportunity to make sure that existing processes for setting compensation comply with New York’s Equal Pay Act, which was amended last year to require that any pay difference between men and women doing the same job be based on “bona fide factor other than sex,” and that the bona fide factor be related to the job and necessary for the business.

A Trend?

New York City will be the third jurisdiction to enact a law banning salary inquiries, following Massachusetts and Philadelphia.  The Massachusetts law takes effect in July of 2018 and the Philadelphia law is to take effect in May.  However, the Chamber of Commerce of Greater Philadelphia filed a lawsuit in federal court on April 9, 2017 challenging the Philadelphia law and seeking an injunction, claiming it deprives businesses of their First Amendment rights. Several other states and localities are considering similar measures.