New York City Salary History Law Takes Effect

As discussed in our “New York Employer’s Mid-Year Review” blog post, Local Law 67 (“salary history law”) took effect on October 31, 2017, and prohibits all New York City employers, employment agencies, and their employees and agents (collectively “employers”) from inquiring about an applicant’s salary history (including current or prior wages, benefits, and other compensation) during the hiring process, and from relying on an applicant’s salary history when determining his or her compensation package. As discussed in detail in the above-referenced blog post, the law does not prohibit a candidate from voluntarily (and without prompting) disclosing his or her salary history, and, in that situation, employers may consider and verify salary history in setting compensation. The law also includes specific exemptions and provides for the same remedies as other claims brought under the New York City Human Rights Law.

The New York City Commission on Human Rights, which has enforcement responsibilities for the salary history law, recently issued Frequently Asked Questions (“FAQs”), which clarify the scope of the law’s coverage, what employers are permitted and not permitted to do in connection with salary inquiries, the definition of compensation, and best practices. Some key points set forth in the FAQs, include, among others:

• The law covers most applicants for jobs in NYC, regardless of employer size.
• Employers may inquire as to an applicant’s salary expectations, but cannot inquire about his/her salary history, even where the employer makes clear that the request is voluntary.
• Employers may not seek information about an applicant’s salary history from sources other than the applicant, such as employees who worked with the applicant at a different employer, or through public record searches.
• If a candidate voluntarily discloses his/her salary history, the employer may inquire further, verify the employee’s representations, and rely on such compensation information to determine a compensation offer.
• The term “compensation and benefits” is defined broadly under the law and encompasses many factors, including but not limited to bonuses and retirement plans.
• As to commission-based earnings, employers may not inquire concerning the amount of commissions a candidate earned at a prior employer, but may ask about “objective” measures of performance, “such as the volume, value or frequency of sales.”
• Employers may inquire about whether a candidate will need to forfeit deferred compensation or unvested equity from their current employer, request documentation, and consider such information when making the applicant an offer.
• While employers may search for general information about industry compensation standards, they may not conduct searches designed to uncover the salary of a specific applicant, such as by searching an applicant’s job title at a prior place of employment on a website that collects salary information.
• In industries where employees are paid on a profit percentage basis, employers may not ask about an applicant’s current or former profit percentage, but can inquire as to objective factors, such as the “size of” a “book of business,” or “profits generated.”
• The law covers information obtained through background checks. As always, employers should be mindful of other restrictions and limitations concerning background checks.

Employers should carefully review their employment applications and hiring practices and processes to ensure compliance with the new law.

For answers to any questions regarding this blog, please feel free to contact an attorney in the Gibbons Employment & Labor Law Department.