Businesses with employees in New York City, take note: beginning October 31, 2017, employers cannot inquire about an applicant’s salary history (wages, benefits, or other compensation) or rely on that history to make decisions in the hiring process, such as determination of salary, benefits, or in the negotiation of an employment contract.
It’s critical that employers understand their obligations under the new law and take proactive steps to ensure compliance. Here, some details:
What does the law prohibit?
The law prohibits employers from asking questions or seeking information about a candidate’s current or prior earnings or benefits, such as on a job application; asking for this information from a candidate’s current or former employer; or searching public records for this data. Employers are also barred from relying on any information about an applicant’s current or prior earnings or benefits to determine compensation in the new position, if hired.
Which employers and applicants does the law apply to?
The law applies to all New York City employers, regardless of size; even if you employ just one employee in New York City, your business must comply. The law covers candidates for new jobs in New York City; applicants for a promotion or transfer with their current employer are not covered.
Can I bring up salary at all?
Employers are not prohibited from discussing the anticipated salary, bonus, and benefits of a position, and remain free to inquire about the candidate’s requirements or expectations for salary, bonus, benefits, or commission structure. Employers may also ask for objective information about the applicant’s productivity in a current or prior position, such as their revenue, sales, reports of profit or production, or books of business.
Employers can also contact an applicant’s current or former employer or search online to verify information such as work history or responsibilities. However, it is important to note that if these inquiries lead to the accidental discovery of prohibited salary information, the employer cannot rely on that information in making salary decisions. The law also does not prohibit employers from making inquiries required or authorized by federal, state, or local law.
The only circumstance in which employers may verify and consider salary information is if a candidate offers the information voluntarily and without prompting on the employer’s part during an interview.
What are the consequences for violations?
The law is intended to encourage employers to make compensation decisions based on qualifications, in an effort to combat wage inequality for female and minority job applicants. A non-compliant employer could face fines, damages, and mandatory training. The New York City Commission on Human Rights may impose civil penalties of up to $125,000 for unintended violations and up to $250,000 for willful violations; employers may also face civil lawsuits.
What steps should my business take to comply?
Businesses are advised to update their hiring policies and documents, such as job applications and background check forms, to remove prohibited inquiries about salary history. Remember, not all of these documents are physical; posts on online job boards or social media must also comply. If your company has a list of topics or questions to address during interviews, be sure they are revised to keep the salary discussion focused on expectations and requirements rather than history. Update all internal documents used in the hiring process.
Training all employees involved in hiring (not just HR professionals) is also crucial. They must understand the law’s requirements and resulting changes to the hiring process.
Please reach out to us with any questions about the law and guidance on compliance.