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Salary History Law Goes Into Effect in New York City

On October 31, 2017, New York City’s salary history “ban” went into effect.  The law, which amends the New York City Human Rights Law, prohibits prospective employers (as well as their agents and employees, and employment agencies) from inquiring about an applicant’s salary history, or relying on an applicant’s salary history to make decisions about the applicant’s salary, benefits, or other compensation. 

The Salary History Law makes it an “unlawful discriminatory practice” for a prospective employer to ask an applicant or an applicant's current or former employer questions about, or attempt to solicit information regarding, an applicant’s salary history.  This includes questions about an applicant’s salary, benefits, and other compensation, and may include factors such as a car allowance, retirement plan, earned commissions, and bonuses.  A prospective employer also is prohibited from searching public records for this information, and, should a prospective employer come across this information, it cannot rely on such information to make decisions about an applicant’s salary, benefits, or other compensation.  

However, if an applicant voluntarily, and without prompting, discloses her salary history to the prospective employer, then the prospective employer can consider the applicant's salary history in determining salary, benefits, and other compensation, and may verify the applicant's salary history with a prior or current employer.  

Prospective employers also can ask about any objective measure of an applicant's productivity like revenue, sales, book of business, profits generated, or other production reports.  They also can discuss an anticipated salary or range for the position and the applicant’s expectations, and the value of other offers received by the applicant.  Employers may ask whether an applicant will have to forfeit deferred compensation or unvested equity from their current employer and the value and structure of the deferred compensation or unvested equity, request documentation to verify the applicant’s representations, and consider such information in making the applicant an offer.

The law applies to all employers regardless of their size and is intended to be interpreted broadly.  For example, the law may apply to applicants who live and interview in New York City, even if the job is outside of New York City.  On the other hand, the law likely will not apply to an applicant who lives in New York City but is interviewed and will work outside of New York City.  The law does not cover an employer’s current employees who are applying for an internal promotion or transfer, and once an employee is hired, and employer may inquire about an employee’s salary history.  The law also generally will not apply to former employers who disclose salary information to the prospective employer, but those who aid and abet a violation of this law may be held liable. 

Practically, employers must refrain from asking questions about an applicant’s salary history, and must remove these questions from employment applications and other documents where salary history information is requested.  Employers should educate personnel who are involved in the interviewing and hiring process regarding these prohibitions and train them to focus on questions about salary expectations instead of salary history, and on an applicants’ salary demands, skills, and qualifications.  If a prospective employer is permitted to perform a background check before a conditional offer has been made, or decides to run a background check after a conditional offer is made, the New York City Commission on Human Rights recommends that employers specify to reporting agencies that information about salary history be excluded from the report.  Employers who work with headhunters, recruiters, and employment agencies also should obtain a copy of the applicant’s written consent authorizing the headhunter to disclose that information before relying on a headhunter’s representations about an applicant’s salary history.

Employers who violate this law may be required to pay damages, a fine, and be subject to additional relief such as training and posting requirements. For additional information on the Salary History, contact the attorneys at Berke-Weiss Law.