Client Alert

New York City’s Salary History Ban Going into Effect October 31: What Employers Need to Know

October 13, 2017

By Caitlin D. Brown, Emily R. Pidot & Sara B. Tomezsko

New York City’s Salary History Ban goes into effect as of October 31, 2017. As part of the New York City Human Rights Law (“NYCHRL”), the law makes it unlawful for an employer, employment agency, or their employees or agents to inquire about an applicant’s salary history, or to rely on an applicant’s salary history to determine the applicant’s salary, benefits, or other compensation during the hiring and contract negotiation process. However, should the applicant voluntarily and without prompting disclose his or her salary history to the employer, the employer may rely upon and verify that information.

1. Who Is Covered by the New Law?

The law applies to employers—regardless of size, employment agencies, or their employees or agents. According to guidance issued by the NYC Commission on Human Rights (“CCHR”), the law will not apply where the applicant simply resides in New York City but is interviewed outside of New York City for a position outside of New York City. However, if an employer conducts an interview in New York City, even for a position outside of the city, the law may apply.

2. How Is “Salary History” Defined?

Salary history includes the applicant’s current or prior wage, benefits, or other compensation, including commissions or profit percentage earned. According to the CCHR, “benefits” and “other compensation” should be interpreted broadly and may include many factors, such as a car allowance, a retirement plan, or bonuses. Salary history does not include an objective measure of an applicant’s productivity, such as revenue, sales, book of business, profits generated, or other production reports.

3. What Does It Mean to “Inquire” about Salary History?

The statute broadly defines an inquiry as communicating any question or statement to any of the following to obtain the applicant’s salary history:

  • An applicant;

  • An applicant’s current or prior employer; or

  • A current or former employee or agent of the applicant’s current or prior employer.

An “inquiry” also includes searching publicly available records or reports to obtain an applicant’s salary history, including searching websites that list the compensation of the applicant’s title at the applicant’s current or former place of employment. Further, if an employer discovers salary history information in the course of conducting a background check or otherwise seeking to verify non-salary related information, the employer cannot rely on this salary history information in determining the applicant’s compensation. However, the law does not bar employers from searching for general information about industry compensation standards.

4. What Topics of Discussion Are Permissible under the Law?

  • The employer’s proposed or anticipated salary or salary range for the position.

  • An applicant’s expectations with respect to salary, benefits, and other compensation.

  • Any objective measures of the applicant’s productivity, such as revenue, sales, or other production reports.

  • The value and structure of any deferred compensation or unvested equity an applicant would forfeit if they resigned from their current employer. Employers may request documentation to verify the applicant’s representations and consider such information in making the applicant an offer.

  • The value of competing offers the applicant has received from other prospective employers, or counter-offers from the applicant’s current employer.

  • An employer is not restricted from inquiring about salary history once the applicant has been hired and the individual’s compensation has been set.

5. Are There Any Exceptions to the Application of the Salary History Ban?

Yes. The law does not apply to:

  • Instances in which the applicant voluntarily and without prompting discloses salary history to the employer. A salary disclosure is “without prompting” if the average job applicant would not think that the employer encouraged the disclosure based on the overall context and the employer’s words or actions. If this occurs, the employer may then discuss or inquire about the applicant’s salary history, verify the applicant’s representations about salary history, and rely on information about the applicant’s salary history in determining what to offer the applicant in salary, benefits, and other compensation.

  • Actions taken pursuant to applicable federal, state, or local law that specifically authorizes disclosure or verification of salary history for employment purposes or specifically requires knowledge of salary history to determine an employee’s compensation. However, no exemption exists for foreign or international law.

  • Current employees applying for internal promotion or transfer.

  • Public employee positions in which collective bargaining is used to determine salary, benefits, and other compensation. This exemption does not apply to private positions.

6. What Steps Should Employers Take before the Law Goes into Effect?

  • Remove questions regarding compensation history from all application forms, electronic or otherwise, or replace such inquiries with a question regarding the applicant’s compensation or salary expectations. Employers will not avoid liability if they retain this question on their applications but include a disclaimer that individuals in New York City need not answer the question.

  • Instruct all personnel involved in the hiring process that they may not inquire as to an applicant’s salary history.

  • If employers work with professional recruiters or other employment agencies, the employer should work with these entities to review and revise their policies in light of the fact that the salary-history ban also applies to employment agencies, headhunters, and employers’ agents. The CCHR recommends obtaining the written consent of the applicant before obtaining an applicant’s salary history from a headhunter or recruiter.

  • If running a background check, employers should specify that information regarding salary history should be excluded from the report.

Note that the NYCHRL contains additional restrictions on the use of background checks, including limitations on the use of credit checks and criminal history records.

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Image: Patrick W. Shea
Patrick W. Shea

Partner, Employment Law Department

Image: Emily R. Pidot
Emily R. Pidot

Partner, Employment Law Department

Image: Sara B. Tomezsko
Sara B. Tomezsko

Partner, Employment Law Department

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