New York City Passes Legislation Banning Salary History Inquiries During Interview Process

On April 5, 2017, the New York City Council approved a bill prohibiting private employers from (i) inquiring into an applicant’s current or previous salary with another employer or (ii) relying on an applicant’s salary history to make any compensation determinations during the hiring process. Employers also cannot search publicly available records or ask the applicant’s former employer for compensation information. Importantly, the law defines “salary” broadly as including salary, benefits and other compensation.

Notably, if an applicant “voluntarily and without prompting” chooses to reveal his or her salary history, an employer may consider this information in determining compensation. Employers also may announce in a job listing or elsewhere the salary or salary range for the position. Further, the law does not apply to internal applicants for transfer or promotion, and thus makes clear that an employer is permitted to consider a current employee’s salary in making these decisions.

The law specifically authorizes prospective employers to ask applicants about their expectations with respect to compensation and benefits, including any unvested equity or deferred compensation that an applicant would forfeit by leaving his or her current employer. Moreover, the law does not affect employers’ ability to conduct background checks, provided they do not seek compensation information from former employers or otherwise.

While Mayor Bill de Blasio has yet to sign the bill, he is expected to do so shortly. This will trigger the 180-day clock on the law’s implementation, and employers should see the law go into effect in October 2017. Once enacted, the law will be enforced by the New York City Human Rights Commission.

New York City is not the first jurisdiction to enact these restrictions, and it will not be the last. Similar laws are already on the books in Massachusetts (effective July 2018) and Philadelphia (effective May 2017). Additionally, more than 20 other cities and states have proposed similar legislation. Given this trend, employers that have employees outside New York City need to regularly monitor developments in other jurisdictions.

To comply with the new law, New York City employers should implement the following:

• Update employment applications to ensure questions regarding salary history are removed from all hiring documentation.
• Train recruiters and hiring managers to abstain from inquiring into an applicant’s historical compensation or benefits.
• Ensure that background checks do not seek information regarding historical compensation.
• Consider whether to implement a procedure to inquire about applicants’ compensation expectations as a standard part of the recruiting process.
• Companies operating in multiple jurisdictions should consider whether to enact companywide policies preventing salary history inquiries during the hiring process, which would need to ensure compliance with the expanding universe of laws addressing such issues and their sometimes divergent requirements, or whether such restrictions should instead be implemented on a jurisdiction-by-jurisdiction basis.

For questions or concerns regarding this new legislation, please contact a member of Kramer Levin’s Employment Department.