Hiring in New York City? Don’t ask about pay history.

New legislation was passed in NYC that prohibits employers from asking job applicants about their past compensation and benefits.

The New York City Council passed the bill, Introduction Number 1253-A, on April 5th. It prohibits an employer from asking the following people about compensation history:

  • A job applicant
  • The applicant’s current or former employers
  • Agents or employees of the applicant’s current of former employers

The bill also:

  • Bans employers from searching public records for the purpose of gaining salary history.
  • Makes it illegal to rely on past compensation when determining what salary or benefits to offer a job applicant.

NYC Mayor Bill de Blasio is expected to sign the bill into law, which would then make it effective after 180 days.

The bill does have a few instances where exceptions can be made. An employer may inquire about the following:

  • The applicant’s expected compensation and benefits.
  • Objective measures of an applicant’s past productivity, such as revenue or sales figures.
  • Unvested equity or deferred compensation the job candidate would forfeit upon leaving the present employer (ex. stock).
  • If an applicant voluntarily, without prompting, discloses his or her salary history, the employer may verify and consider it in salary and benefit decision-making.
  • If a background check intended to verify non-salary information results in salary information being disclosed, the employer would not be penalized. (Just so long as the employer doesn’t solely use that information to determine or negotiate compensation).

Here are situations where the bill would not be applicable:

  • Internal transfers or promotions. The bill’s prohibitions only apply to new hires.
  • It does not apply to public employees whose salaries and benefits are determined through collective bargaining.
  • Where federal, state, or local law specifically authorizes disclosure or verification of salary history.

Once the bill does become law, applicant history inquiries will be considered an unlawful discriminatory practice under the New York City Human Rights Law (NYCHRL). In terms of penalties, the employer would be required to pay for damages to the applicant, pay potential fines and/or adhere to injunctive relief such as corporate training or other remediation measures.

The National Law Review suggests that employers train all employees involved in the hiring process regarding compliance with this law.

Disclaimer: Please note that this is not all inclusive. Our guidance is designed only to give general information on the issues actually covered. It is not intended to be a comprehensive summary of all laws which may be applicable to your situation, treat exhaustively the subjects covered, provide legal advice, or render a legal opinion.  Consult your own legal advisor regarding specific application of the information to your own plan.