The New York City Commission on Human Rights (Commission) issued a guidance to assist employers in understanding the New York City’s Salary History law, which has been effective since October 31, 2017. The purpose of this article is to highlight some of the most important new rules. As previously stated in our prior May 11, 2017 compliance article, “It is an unlawful discriminatory practice for employers to inquire about the salary history of an applicant for employment or rely on the wage history of an applicant in determining the salary, benefits, or others compensation for such applicant during the hiring process, including the negotiation of a contract.”
According to the guidance, this salary history ban applies to employers of any size that are hiring job applicants in New York City. The guidance states that if a discriminatory practice occurs outside of New York City, “there could be jurisdiction if the impact of the unlawful discriminatory practice is felt in New York City.”
The law does not apply to:
- Internal transfer or promotion with their current employer;
- Applicants for public sector jobs for which salary is governed by a collective bargaining agreement; and
- People, including former employers, who disclose information about salary history to the hiring employer.
The employer’s job application can request information about the applicant’s compensation expectations or demands but not the applicant’s salary history. If the employer unintentionally discovers the applicant’s salary history through public search or background check, the employer will not be found liable, but cannot rely on the information in determining what to offer the applicant in salary, benefits, and other compensation.
The law allows employers to:
- Inquire about objective indicators of an applicant’s productivity which can include expectations concerning revenues or sales attributable to the applicant; and
- Discuss whether the applicant will be forfeiting equity or deferred compensation by taking the position.
If an applicant voluntarily discloses their salary history without prompting, the employer can discuss and inquire about the applicant’s history, verify the applicant’s representations, and rely on the applicant’s salary history in determining an offer. The guidance clarifies that a voluntary disclosure of salary history is “without prompting” when the applicant does not “think that the employer encouraged the disclosure based on the overall context and the employer’s words or actions.”
The guidance reminds employers to take into consideration of the NYC Human Rights Law when conducting background checks for criminal and credit history. Specifically, “In circumstances where an employer is legally permitted to perform a background check before a conditional offer has been made, or decide to run a background check after a conditional offer, the Commission recommends that employers specify to reporting agencies the information about salary history
be
excluded from the report.”
The guidance gives a broad definition of the terms “benefits” and “other compensation” as it includes car allowance, retirement plan, or bonuses. Employers cannot ask about commissions an applicant earned or ask about the applicant’s current or former profit percentage.
The Commission enforces civil penalties for violations in amounts of up to $125,000 for an unintentional violation and up to $250,000 where the violation is willful and malicious.
The guidance made the following suggestions for employers regarding the law:
- During the hiring process, focus questions on applicants’ salary demands, skills, and qualifications;
- Ensure that job applications and other forms do not include a question about applicants’ salary history, even if such questions are framed as “voluntary;” and
- Modify written policies and educate interviewers and hiring staff to prohibit inquiries about applicants’ salary history.