The New York City law banning salary history inquiries goes into effect on Oct. 31, 2017, and the New York City Human Rights Commission (Commission) has only recently released job applicant and employer fact sheets and a list of Frequently Asked Questions (FAQs). While some of the FAQs put employers' minds at ease, others demonstrate that the Commission views the law as far-reaching.
General Rules:
- Employers may not ask applicants to disclose the amount of compensation (including salary, bonus, commission and other benefits) applicants received at prior employers.
- Employers may not search public records to obtain applicants’ current or prior compensation.
- Employers may not rely on applicants’ current or prior compensation in determining what compensation to offer applicants.
Exceptions:
- Employers may request that an applicant provide compensation “expectations.”
- Employers may state their planned compensation range for the position.
- Employers may request objective indicators of an applicant’s performance (e.g., sales numbers, production reports, or profits generated).
- Applicants may voluntarily disclose their compensation history, but employers may not prompt them to do so. In such cases, employers may verify the disclosed compensation.
Clarifications by the Commission:
- Coverage: Employers that operate in New York City should be extremely cautious when seeking salary history information from any applicant (including those applying for independent contractor work or applicants for roles outside of New York City). While an applicant is not eligible for the protections of the law simply by virtue of the applicant’s residency in New York City, the Commission has taken the position that if any aspect of the hiring process touches New York City, the applicant is entitled to protection under this law.
For example, if an applicant for a role in Pennsylvania is asked in-person in New York City for the applicant’s compensation history, a violation of the law will have occurred. Additionally, the Commission takes the position that if human resources employees or decision-makers located in New York City are managing the hiring process for roles located outside of New York City (including those roles located internationally), a violation of the law occurs if those employees in New York City request or use compensation history information regarding the candidate.
- Applications: Applications may not contain requests for the disclosure of compensation history. A disclaimer that such disclosure is voluntary will not be sufficient to avoid liability.
- Deferred Compensation: Notwithstanding that the language of the law suggests otherwise, the Commission’s FAQs state that employers may ask applicants whether they will forfeit deferred compensation or unvested equity from their current employer. The FAQs add that employers may request the value, structure and documentation of any such forfeiture in advance of extending an offer to the candidate.
- Headhunters: Headhunters are also covered by the law and accordingly may not ask a candidate for compensation history information or disclose such information without authorization by the candidate. The Commission suggests that to the extent a candidate elects to disclose compensation history to the employer via the headhunter, the headhunter should receive the authorization from the candidate in writing and send such confirmation to the employer.
- Competing Offers or Bid-Backs: Employers may ask applicants to disclose the value of competing offers or bid-backs from their current employers.
- Market Survey of Current Employees: Employers may ask current employees for their compensation from prior employers. Employers seeking to do so should (a) ensure that such inquiry solely occurs after the employee has commenced employment and (b) wall off such information from consideration during future compensation discussions concerning the employee.
Employer Next Steps:
- Edit applications to remove any requests for compensation history information.
- Provide manager and human resources training concerning the new law.
- Create a system for documenting voluntary disclosures of compensation history. Communicate with headhunters regarding expectations going forward.
- In light of California’s recent adoption of a similar law, consider removing the use of compensation history from national and international hiring processes.