The Trend to Ban Salary History Questions Continues
It will no longer be legal for employers in New York City to ask salary history questions of job applicants. New York City has approved a ban on salary history questions in interviews. This will mean that HR professionals who do business in New York City must make critical adjustments to their employment documents and overall hiring procedures.
This legislation stays in line with the current trend and both city and state levels that attempts to address pay disparities for minorities and women. The law aims to address that females or minorities are sometimes paid less than their white male counterparts, and the use of salary history when determining pay at a new positon can perpetuate these institutionalized wage disparities.
Similar legislation has already passed in Massachusetts, Philadelphia and Puerto Rico, and other cities and states are considering following in their footsteps. Legislation has also been introduced at the federal level. The Massachusetts law is scheduled to take effect in July of 2018 while the Philadelphia ordinance is on hold pending a legal challenge.
The New York City bill was signed on May 4 by Mayor Bill de Blasio and will go into effect on Halloween—Oct. 31, 2017. This is a busy time for employers who are preparing for end of year compensation cycles so businesses will want to start preparing now to accommodate the changes.
This law presents a challenge for businesses that are accustomed to using salary history inquiries during the hiring process, and their policies and practices will need to be overhauled.
New York’s Salary History Ban: Key Takeaways
- New York City already had an existing law that was signed in 2016 that banned salary history questions for any government employees. The new legislation extends this ban to private employers.
- "Salary history" refers to current and prior salary, benefits, and all other forms of compensation.
- Employers in New York City will now be banned from soliciting this information from the applicant, from the applicant's current or former employer, or from an employee of that employer. Further, they will be banned from searching publicly available records or reports to obtain salary history information.
- The text of the new legislation states that employers cannot "rely on the salary history of an applicant in determining the salary, benefits or other compensation for such applicant during the hiring process, including the negotiation of a contract."
- The ban does not prevent inquiries into objective measures of the applicant's productivity such as revenue, sales or other production reports.
Exceptions to New York’s Salary History Ban
The law broadly defines salary history, but there are a few notable exceptions to the ban.
Such as, if a candidate "voluntarily and without prompting" reveals salary history, then this data may be used to determine that candidate's salary, benefits and other compensation—and the employer is required to validate that candidate's salary history.
Therefore, employers should have processes in place in case a candidate volunteers that information.
Further, employers are still allowed to ask about a job candidate's pay expectations and may discuss any unvested equity or deferred compensation that the applicant would forfeit by resigning from his or her current job. Employers will also be allowed to inform job applicants about the position's targeted salary range.
It is advised that employers shift their focus from asking about salary history to discussions about an applicant's expectations—or an employer's anticipated salary range—which keeps the focus on qualifications and other nondiscriminatory factors.
The legislation also addresses the following additional exclusions to the salary inquiry ban:
- The ban doesn't apply when salary disclosure or verification is specifically authorized under federal, state or local law.
- It also doesn't apply to current employees who are applying for an internal transfer or promotion.
- Public positions are excluded when compensation and benefits are determined through collective bargaining.
HR's Role in Complying with New York’s Salary History Ban
HR departments will have to institute changes to comply with the salary history ban. Some of them include:
- Interviewers must be trained to stop asking questions about salary history and employment applications must be revised to delete these questions.
- Employers will need to review their background check forms and phone screen and interview materials.
- HR professionals should reach out to any third parties that may be supplying this information—such as recruiters from staffing firms—to make sure that they know not to send the prohibited data.
- Hiring managers should look at education, productivity and experience, including where an applicant previously worked and what skills were needed in those jobs to determine salary.
- Multistate employers should keep an ear to the ground on this issue, as similar bans are gaining momentum in other jurisdictions.