New York City Restricts Employer Questions on Salary History in Effort to Reduce Gender-Based Wage Gap

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By Michael A. Shadiack & Michael J. P. Schewe

On April 5, 2017, the New York City Council passed legislation prohibiting employers from making salary history inquiries or relying on salary history to determine a prospective employee’s salary. The law will go into effect 180 days after it is signed by Mayor Bill de Blasio, who is expected to do so in the near future. New York City joins Massachusetts and Philadelphia, which each passed similar laws. 

Essentially, the law bars employers from asking a candidate how much money the candidate made at his/her last job and/or from relying on a candidate’s salary history in determining a compensation offer. Prohibited conduct includes not only inquiries made directly to the candidate, but also any investigation into the candidate’s employment history, whether through public records or direct contact with prior employers. The law does not preclude discussing a candidate’s salary expectations or inquiries into objective measures of the candidate’s productivity, such as revenue, sales or other metrics. An employer can also discuss with the candidate (and confirm with prior employers) a candidate’s voluntary disclosure of compensation. 

Proponents of the law claim that it will reduce gender-based wage disparities by forcing employers to make independent judgments as to salary offers based on factors such as resources and market rates.  Opponents of the New York City and similar laws claim that employers are unduly burdened by these restrictions.  The Chamber of Commerce for Greater Philadelphia filed a federal lawsuit on April 6, 2017 to enjoin implementation of Philadelphia’s law.  It is to be seen if a similar action is filed in an effort to stop the New York City law before it goes into effect. 

New York City employers should review their hiring policies, procedures and practices to ensure compliance with the new law.  Prior to the effective date, job applications should be revised to take out questions regarding prior compensation, and hiring officers – including recruiters – should receive training to avoid running afoul of the new prohibitions.