New York Employment Law Update: New York City’s New Salary History Prohibition for Employers Takes Effect Tomorrow; Minimum Wages Set to Increase

October 2017

On May 4, 2017, Mayor de Blasio signed this bill into law, which makes it an unlawful discriminatory practice for employers to ask applicants about their salary history, or to rely on their salary history when determining their compensation, unless the applicant volunteers that information without prompting. The new law is set to take effect on October 31, 2017.

What is Prohibited under the Law?

Under this amendment to the New York City Human Rights Law (“NYCHRL”), it is an unlawful discriminatory practice to ask an applicant about his or her salary history, or to ask the applicant’s current or former employer (including current or former employees or agents of the applicant’s current or former employer) about the applicant’s salary history. Further, employers are prohibited from searching publicly available sources of information for anything pertaining to a applicant’s salary history (or, if salary history information is revealed by a routine background check, such information cannot be used to determine the applicant’s compensation).

The term “salary history” is defined broadly under this amendment, and it includes the applicant’s former or current wages, along with benefits received and any other forms of alternative compensation.

Furthermore, employers are also prohibited from considering salary history when determining an applicant’s salary, benefits and other forms of compensation. The lone exception to this prohibition is when an applicant voluntarily and without prompting discloses salary history information. In that case, an employer may consider the applicant’s salary history in determining the applicant’s compensation, and may verify the information provided by the applicant.

Can Employers Discuss Compensation with Applicants?

Yes. Inquiring about salary history is prohibited, but the law does not prohibit employers from talking to applicants about the salary and other benefits being offered with the position. Specifically, employers can discuss the anticipated compensation for the position, and the applicant’s expectations with respect to salary and other benefits, including any unvested equity or deferred compensation that would be forfeited or lost as a result of resigning from their current employer. The employer can also inquire about “objective measures” of productivity, which include, but are not limited to, reports concerning revenue or sales generated by the applicant.

Penalties for Violations

Employers who violate the law may be exposed to significant liability. The New York City Commission on Human Rights (“NYCCRR”) is empowered to impose a civil penalty of up to $125,000 for an unintentional violation, and up to $250,000 for a willful, wanton or malicious act. Further, applicants are also permitted to pursue a private right of action under the law, by either filing a charge with the NYCCRR, or commencing a lawsuit seeking damages under the law, which may entitle an applicant to back pay, compensatory damages and attorneys’ fees.

Next Steps for Employers to Ensure Compliance

Employers should take immediate steps to review and modify their hiring practices and procedures to ensure compliance with the law. Employers must refrain from asking applicants about their salary history. Job applications should be revised to remove any reference to an applicant’s salary history. Employers that utilize background checks or other verification services should ensure that those services do not collect an applicant’s salary history information.

It is also strongly recommended that human resources personnel and all others involved in the hiring process receive training concerning what is and is not permitted under the law.

Reminder - Minimum Wages Set to Rise

Employers should take note that as of December 31, 2017, New York City’s minimum wage for employers with 10 or fewer employees will rise to $12.00/hour, while the minimum wage for employers with 11 or more employees will rise to $13.00/hour.

For those employers with employees in New Jersey, New Jersey’s minimum wage for all employers will rise from $8.44/hour to $8.60/hour.

For more information on this issue or other employment matters, please contact:

Carol M. Goodman at [email protected] or +1 212 592 1465

© 2017 Herrick, Feinstein LLP. This alert is provided by Herrick, Feinstein LLP to keep its clients and other interested parties informed of current legal developments that may affect or otherwise be of interest to them. The information is not intended as legal advice or legal opinion and should not be construed as such.