What employers need to know
Earlier this month New York City Mayor Bill de Blasio signed a bill into law that would make New York City the third jurisdiction to ban employers from making inquiries into a job applicant's salary history (behind Massachusetts and the city of Philadelphia). The law is set to take effect on October 31, 2017.
What Does the Law Do?
The law amends the existing New York City Human Rights law by making it a "discriminatory practice" for employers to inquire about a candidate's salary history. This means that an organization may not ask the prospective employee about their current salary, benefits, or other compensation OR to make their current salary or benefits a factor in determining the salary, benefits, or other compensation for the applicant.
However, if a job applicant voluntarily and without prompting discloses salary information then the employer may use the information to determine salary and benefits, and may even verify with a previous employer. Employers are also not prohibited for using salary history when interviewing internal candidates for promotion or transfer, or any time state, federal, or local law may authorize an employer to inquire about salary history for employment purposes.
The penalty for an unintentional violation of this new law could be up to $125,000. For a "willful or malicious" violation, an employer could be fined up to $250,000. Violations could also result in having to pay compensatory damages, court fees, and back wages.
It is important to understand that this law does not prevent talking to a candidate about the factors that are used to determine salary, benefits and other compensation for the open position, the candidate's salary expectations, and, objective measures of a candidate's productivity that can include factors such as sales attributable to a candidate.
Why was the law passed?
The law was passed as part of a broad advocacy effort nationwide to address discriminatory pay practices. It comes on the heels of New York State's Equal Pay Act. The intent of the law is to make salary, benefits, and other compensation related to the job duties as much as possible in an effot to distance them from other factors, such as sex.
This law could be the part of a broader trend among state and local governments to address what many see as issues with fair pay and compensation. While efforts to pursue similar legislation may face an uphill climb at the federal level, it is conceivable that, as an example, New York State could follow New York City's lead. At the same time, some organizations are challenging these laws- a legal challenge to the city of Philadelphia's law by The Chamber of Commerce of Greater Philadelphia will be important to watch.
What should employers do?
Employers that are subject to this law should review their interviewing and hiring practices. Make sure that questions regarding salary history are removed from any forms or questionnaires that are used in the interviewing/hiring process. The organization should also develop a method of documenting voluntary disclosures of salary information that a candidate may make.
Further, any personnel within the organization who may have a role in the interviewing/hiring process should be trained to both avoid asking questions about salary history, but also how to properly document voluntary disclosures of salary information/history.
It's important that employers create a compensation structure that is internally equitable and externally competitive. If your organization would like to learn more about how HR One can help implement a wage and salary program, use the form below to contact us.