Employment Update: New York City Council Passes Legislation Banning Salary History Inquiries

by | Apr 24, 2017 | Labor & Employment | 0 comments

New York City Council Passes Legislation Banning Salary History Inquiries

On Wednesday, April 5th, New York City passed new legislation, which Mayor de Blasio is expected to approve, making it illegal for New York City employers or employment agencies (collectively, “employers”) to inquire about or rely on the “salary history” of a job applicant during the hiring process.  Under the new law, “salary history” is defined to include “wage[s], benefits or other compensation.”  The law also prohibits New York City employers from searching public records to obtain an applicant’s salary history.

While the new law would prohibit inquiries into an applicant’s salary history, employers can discuss compensation “expectations” with an applicant.  The anticipated law also provides exceptions under which an employer may consider an applicant’s salary history during the hiring process and when making hiring decisions.  These exceptions apply to applicants for internal transfers or promotions, applicants covered under a collective bargaining agreement, applicants who voluntarily disclose their salary history, and under circumstances in which a law specifically authorizes or requires the disclosure or verification of the applicant’s salary history.

The stated intent of the new law is to reduce gender-based wage disparities – specifically, those affecting women and, particularly, women of color.  However, opponents of the legislation predict a negative impact on applicants who choose not to voluntarily disclose their salary history.  Other opponents anticipate that the proposed law will decrease employer knowledge of market-rate compensation, thereby, resulting in more challenging pay negotiations and increased reliance on third-party surveys.

This new legislation is among the estimated 180 gender pay equity bills introduced nationwide since 2016, and it follows the implementation of similar laws in Massachusetts and Philadelphia.  On April 6, 2017, the Chamber of Commerce for Greater Philadelphia filed a federal lawsuit to challenge that City’s law, alleging First Amendment violations by, in part, prohibiting employers from inquiring into an applicant’s salary history.  It is conceivable that the New York City law once enacted will face a similar challenge.

Currently, the legislation is pending Mayor de Blasio’s signature and is expected to take effect in October 2017.  The NYC Commission on Human Rights will enforce the new law and is expected to impose civil penalties of up to $125 for an unintentional violation of the law and up to $250,000 for an intentional malicious violation of the law.  Prior to October 2017, employers should advise recruiters and hiring managers to avoid any inquiries into an applicant’s salary history, and revise any employment applications or other company documents to remove any inquiries regarding an applicant’s salary history.

This article provides highlights of new legislation as a service to readers and is intended for educational purposes only.  This information should not be construed as legal advice or to create a lawyer-client relationship.  Readers should retain counsel for legal advice and any further inquiries.