November 6, 2017
On October 31, 2017, inquiries into a prospective employee’s salary history became an unlawful and discriminatory practice in New York City. The New York City Human Rights Law, New York City Admin. Code § 8-107(25), now bars direct or indirect salary inquiries to an applicant or the applicant’s current or former employers, and bars any such inquiry from publicly available sources. Moreover, if compensation history becomes available through background verifications or otherwise, the employer may not rely on such information in setting compensation for the new employee.
The law was designed to address the historical pay disparity suffered by women and people of color. The law attempts to ameliorate that disparity by preventing the reliance on salary history in making decisions about what to pay new hires. Similar legislation has been adopted in Philadelphia, Massachusetts, Delaware and Oregon, and is being proposed in several additional jurisdictions.
Employers may continue the following practices under the new law:
- Employers may inquire about an applicant’s salary expectations;
- Employers may inquire about an employee’s unvested equity or deferred compensation – which is especially important if the prospective employer is offering to compensate the applicant for losses in either category;
- An employer may rely on an applicant’s volunteered salary information (and the employer might want to document the voluntariness of this disclosure);
- An employer may inquire about objective measures of the applicant’s productivity such as sales or revenue production attributable to the employee; and
- An employer may make statements about the compensation package it is offering to the prospective employee.
The law applies to all employers in New York City, regardless of the employer’s size, and to all classifications of workers, including W-2 employees, part-time personnel and independent contractors.
An individual may assert a private lawsuit against any employer based on violation of the law, and seek monetary damages, compensatory damages, injunctive relief, punitive damages and/or attorney’s fees. The law will also be enforced by the New York City Commission on Human Rights, but an employee can, in the alternative, file a complaint with the Commission. Among other remedies, the Commission may impose civil penalties of up to $125,000 for an unintentional violation of the law and up to $250,000 for a “willful, wanton or malicious” violation. New York City Admin. Code § 8-126.
New York City employers should review and modify their employment applications, interview policies and verification procedures to ensure compliance with the new law.
This article is intended only as a general discussion of these issues. It is not considered to be legal advice or relied upon. We would be pleased to consider providing additional details or advice about specific situations. For additional information on this topic, please feel free to contact Mark H. Moore, who regularly counsels and litigates for clients in connection with business disputes.