05 May 2017

Money talks in New York city – but not for long

On May 4, 2017, New York City Mayor Bill de Blasio signed legislation (effective as of October 31, 2017), which makes it illegal for New York City employers to inquire about a job applicant's salary history.   The law is an effort to address (and remedy) pay disparities for minorities and women, as many believe that consideration of a potential employee's prior salary in making a job offer serves to perpetuate such disparities and has a continuing negative impact on those groups.  While several states are considering similar legislation, New York joins Philadelphia and Massachusetts in enacting this ban.  

The law, which is an amendment of the New York City Human Rights Law (“NYCHRL”)  (part of the New York City Administrative Code), makes it a discriminatory practice to inquire about an applicant's salary history,  or prior compensation and/or benefits, and further prohibits an employer from conducting an independent search of publicly available resources for such information.   Employers however, are still free to ask about an applicant's desired or expected compensation, or whether the employee will be forfeiting any unvested equity or deferred compensation in accepting their new role.  The hope is that employers will analyze and assess the value or the role being recruited for their own organization and set compensation accordingly.  

Penalties for violation of this law could be extremely stiff – up to $125,000 for an unintentional violation, and up to $250,000 for a willful act, as well as opportunity for relief such as backpay, compensatory damages and attorneys' fees.  Applicants who believe the law has been violated may choose to bring a claim either to the New York City Human Rights Commission (the New York City governmental agency charged with enforcing the NYCHRL) or by civil lawsuit in the New York State Court system.   Going forward, it will be imperative for employers to ensure that their job advertisements do not request salary history, review their applications and remove all inquiries regarding past compensation, and educate their human resources professionals and managers who are involved in the interview process about this prohibition.    

Category: Article