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April 12, 2017

New York City Council Passes Bill Barring Employers’ Request for Applicant Salary History During Hiring Process

On April 5, 2017, the New York City Council passed a bill amending the New York City Human Rights Law (“NYCHRL”) to prohibit New York City private and public employers of all sizes from requesting a job applicant’s salary history to determine the salary, benefits, or other compensation for such applicants during the hiring process, including the negotiation of a contract.  The bill also prohibits an employer that already knows the applicant’s salary history from relying upon that information in determining salary and benefits.  Mayor DeBlasio is expected to sign the bill, and the amendments to the NYCHRL would take effect 180 days thereafter. 

Under the bill, employers would be prohibited from “inquiring about or relying on a prospective employee’s salary history.” The term “salary history” is broadly defined, and includes the applicant’s “current or prior wage, benefits or other compensation.”  However, “salary history” does not include “any objective measure of the applicant’s productivity such as revenue, sales, or other production reports.” The term “to inquire” means “to communicate any question or statement to 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, in writing or otherwise.”  Significantly, employers would also be prohibited from searching publicly available records or reports to ascertain a prospective employee’s salary history.

Despite these requirements, an employer may, without inquiring about salary history, discuss an applicant’s expectations with respect to his or her 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.”  In addition, where an applicant voluntarily and without solicitation discloses salary history to an employer, the employer may consider salary history in determining salary, benefits and other compensation for such applicant, and may verify such applicant’s salary history.

The proposed bill does not apply to: (1) any actions taken by an employer to 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; (2) applicants for internal transfer or promotion with their current employer; (3) any attempt by an employer to verify an applicant’s disclosure of non-salary related information or conduct a background check; or (4) public employee positions for which salary, benefits or other compensation are determined pursuant to procedures established by collective bargaining.

An aggrieved applicant or employee may file a complaint with the City Commission on Human Rights, or an action in court.  Complaints need to be filed with the City Commission within one year or filed in court within three years of any alleged violation.  The City Commission could impose penalties of up to $250,000, and a jury or judge could award compensatory and punitive damages, injunctive relief, and attorneys’ fees.

Challenges to Similar Laws

On April 10, 2017, the Chamber of Commerce of Greater Philadelphia (“Chamber”) challenged in federal court Philadelphia’s Wage Equity Ordinance, a recently enacted ordinance that prohibits employer’s from inquiry about applicant’s salary history.  The Chamber of Commerce of Greater Philadelphia v. City of Philadelphia, et al. (April 10, 2017, E.D. Pa, 2:17-cv-01548).  Specifically, the Chamber alleges that the ordinance infringed on constitutionally protected rights without showing that inquiries about an applicant’s wage history had any relationship to wage discrimination.
While any ruling on the Philadelphia ordinance will not directly impact the bill, a successful challenge will make it more likely that the New York City bill will ultimately face a similar challenge.

Takeaway for Employers

The bill significantly changes the way many New York City employers may calculate and negotiate a prospective employee’s compensation.  Accordingly, New York City employers should train hiring managers and others involved in the hiring process on the bill’s requirements.  Employers should immediately remove questions concerning salary history from employment applications, interview templates, and background check forms.  Employers should also ensure that interviewers refrain from asking about salary history, focusing solely on a prospective applicant’s salary expectations.  Employers should also confirm that any third party vendors, such as background check companies or external recruiters, comply with the bill’s requirements.

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If you have any questions regarding this alert, or any other issue, please do not hesitate to contact us.  We will keep you apprised of developments.