What’s New

Starting October 31, 2017,  all New York City private and public employers (regardless of size) are prohibited from:
a) inquiring about the salary history of a job applicant or
b) relying on the salary history of a job applicant in determining the salary, benefits or other compensation during the hiring process, under an amendment to New York City’s Human Rights Law.

This prohibition includes inquiries in advertisements/postings, interviews, and/or applications, and searching public records to find out about an applicant’s current or prior salary or benefits history.  The law applies to most applicants for positions for full-time or part-time employment, internships, and to independent contractors without their own employees.

Headhunters who qualify as employers, employment agencies, or agents of an employer, or who aid and abet a violation of the NYC Human Rights Law, may also be liable under the law.

Reason for the Law

Proponents of the law argued that employers’ reliance on salary history has perpetuated the gender pay gap where women continue to be paid less than their male counterparts for doing the same job.  The law was enacted to “disrupt the cycle of wage inequality for women and people of color” and “encourage employers to set compensation based on qualifications,” rather than salary history.

Who is Not Protected

The law does not apply to applicants for internal transfer or promotion with their current employer or applicants for public sector jobs where salary is governed by a collective bargaining agreement.

What Inquiries May an Employer Make

According to NYC Commission on Human Rights’ (NYCCHR) FAQ regarding the Salary History Ban, employers may:

• inquire about an applicant’s “expectations” for salary, benefits, bonus or commission structure, without inquiring about salary history;
• state the anticipated salary, salary range, bonus, and benefits for a position;
• ask about objective indicators of an applicant’s work productivity in her/his current or past jobs, such as revenue, sales, production reports, profits generated, or books of business;
• inquire of an applicant’s current or former employers or search online to verify non-salary information, such as work history, responsibilities, or achievements. However, if this results in the accidental discovery of current or prior earnings or benefits, the employer cannot rely on this information in making salary or benefits decisions;
• make inquiries about salary history that are authorized or required by federal, state, or local law;
• verify and consider current or prior earnings or benefits only if offered voluntarily and without prompting by the applicant during the interview process.

The NYCCHR FAQ on the salary history ban recommends, with respect to headhunters that: “To protect against liability, headhunters should obtain written confirmation from job candidates that they consent to the disclosure of their salary history.”  This recommendation seems problematic, however, as an “end run” around the prohibition against inquiring about salary history, and employers should be careful of such an approach that may be challenged in court as violative of the law’s intent.

Noteworthy

• Independent contractors without their own employees also are protected by this salary history ban.
• Intentionally “aiding and abetting” a violation of the law is also a separate violation so former employers offering salary information about a former employee to an inquiring prospective employer, “headhunters” and recruiting agencies also need to be wary.
• The NYCCHR FAQ asserts that, “if an unlawful discriminatory practice, including an inquiry about salary history, occurs during an in-person conversation in New York City, there will likely be jurisdiction because the impact of the unlawful discriminatory practice is felt in New York City. If an unlawful discriminatory practice occurs outside of New York City, there could be jurisdiction if the impact of the unlawful discriminatory practice is felt in New York City.”  The FAQ states that NYC residency alone is not enough to establish discriminatory impact.  What if the interview is conducted by Skype, telephone, or some manner other than in-person?  Must the employer, applicant or both be physically situated in NYC at the time of the “virtual” interview for there to be jurisdiction?  Is it possible that a court would find that an applicant residing in NYC but working outside NYC would be protected under this NYCHRL amendment if the unlawful salary inquiry were made in NYC?

NYC Joins the Salary History “Ban-dwagon”

The NYC salary history ban follows similar bans in other jurisdictions like Massachusetts, Philadelphia, Pennsylvania,[1] New Orleans, Louisiana, Puerto Rico, and mostly recently, California.

Penalties for Non-Compliance

• The New York City Commission on Human Rights is charged with enforcing the law, and can impose civil penalties ranging from $125,000 to $250,000, and  mandatory training and posting for violators.
• Complainants may sue in court alleging a violation of  New York City’s Human Rights Law, where they may get damages, attorneys’ fees, and costs.

What Employers Should Do Now

In light of these legal developments, organizations may want to:

• ensure that employment applications and other hiring materials do not ask for prior salary history;
• ensure third-party background checks will not yield prohibited information about salary history;
• inform and train hiring managers, human resources, recruiters, headhunters, and others involved in the hiring process on the new legal requirements;
• consider reviewing various resources and market-rate compensation surveys for the positions at issue together with an applicant’s qualifications, skill and value to the organization to determine appropriate compensation. (Nonprofits may already be considering such factors in determining executive compensation); and
• finally, remember to comply with recent NYC laws prohibiting credit history inquiries and pre-offer criminal background check inquiries, as applicable.

Employers can learn more about this new law at New York City’s Salary History Ban FAQs: http://www1.nyc.gov/site/cchr/media/salary-history-frequently-asked-questions.page.

For assistance with training hiring managers on the new law, employment law audits of your employment practices and policies, and legal review of your documentation and hiring practices, please contact Lisa Brauner, Head of Perlman & Perlman LLP’s Employment Law practice, at 212-889-0575, lisa@perlmanandperlman.com.

[1] The Philadelphia ban is currently being challenged in court.

The post NYC Salary History Ban Takes Effect October 31, 2017 first appeared on Perlman Sandbox.

Under the law, “to inquire” means:

1. to communicate any question or statement to an applicant, an applicant’s current or prior employer, or a current or former employee or agent of the applicant’s current or prior employer, in writing or otherwise, to get an applicant’s salary history, or
2. to conduct a search of publicly available records or reports for the purpose of getting an applicant’s salary history.

This amendment to NYC’s Human Rights Law follows on the heels of Mayor De Blasio’s November 2016 executive order, prohibiting city agencies from inquiring about salary history before making a job offer, and Governor Cuomo’s executive order similarly prohibiting state agencies from doing the same.  New York State already had existing gender equity laws requiring equal pay for equal work, but that law along with similar laws in other States apparently have not remedied the persistent gender pay gap.

Proponents of the New York City salary history bill believe that the bill is yet another way to close the gender pay gap.  They have stated that employers’ reliance on past salary history has perpetuated the gender pay gap, where women continue to be paid less than their male counterparts.  The purpose of the law is to reduce the likelihood that women will be prejudiced by past salary levels.  “Instead, employers would be encouraged to set salaries based on factors such as resources and market rates.”

The nonprofit organization American Association of University Women has reported that the gender pay gap is real, documenting its research and conclusions in a recently published Spring 2017 edition on the subject entitled: “The Simple Truth about the Gender Pay Gap,” http://www.aauw.org/aauw_check/pdf_download/show_pdf.php?file=The-Simple-Truth.

The NYC salary history ban follows similar bans in other jurisdictions like Philadelphia, Pennsylvania,[1] New Orleans, Louisiana and Puerto Rico.  In last year’s blog entitled “Is Asking a Job Applicant about Their Past Salary, History?” we reported that Massachusetts became the first State in the nation to prohibit employers from asking job applicants about salary history,[2] and that California is considering a similar law.  See https://www.perlmanandperlman.com/show-me-the-money-massachusetts-prohibits-employers-from-asking-job-applicants-about-salary-history-and-other-jurisdictions-may-follow/

Penalties for Violation of the Law

The New York City Commission on Human Rights is charged with enforcing the law, and can impose civil penalties ranging from $125,000 to $250,000.  Alternatively, if a complainant chooses to bring a private action in court and prevails, a finding of a violation of New York City’s Human Rights Law may result in compensatory damages, punitive damages, equitable remedies, reasonable attorneys’ fees, costs, and expert witness fees.

Take-Aways

In light of these legal developments, organizations may want to:

• conduct an audit (with assistance of legal counsel to preserve attorney-client privilege) of pay equity;
• review and update employment applications that ask for prior salary history and other relevant policies;
• ensure third-party background checks do not yield prohibited information about salary history;
• inform and train hiring managers, human resources, recruiters, and others involved in the hiring process on the new legal requirements; and
• consider reviewing various resources and market-rate compensation surveys for the positions at issue together with an applicant’s work experience and value to the organization to determine appropriate compensation. (Nonprofits may already be considering such factors in determining executive compensation).

For assistance with conducting audits, and legal review of your documentation, policies, hiring practices and training, please contact Lisa Brauner, Employment Law practice, at 212-889-0575, lisa@perlmanandperlman.com.

[1] A court has recently temporarily stayed enforcement of the Philadelphia law which was to take effect on May 23, 2017, pending a legal challenge to its constitutionality.  The Chamber of Commerce for Greater Philadelphia is claiming, among other things, that the law violates employers’ First Amendment rights.

[2] The law will take effect in July 2018.

The post NYC Makes History/”Herstory,” Barring Employers From Inquiring about Salary History first appeared on Perlman Sandbox.

In a March 3, 2015 Dilbert comic strip, the boss tells his subordinates that because of a study showing that tall people earn more than shorter people, the company will not be doing performance reviews but will instead simply measure the height of each employee and then pay them accordingly. The boss then adds: “Alice will earn 10% less than the men. I think that’s the law.”

Well, jokes like those about women earning less than their male counterparts for doing the same job–as a matter of fact, if not a matter of law– may soon be “history” or “herstory” if laws like the one recently passed in Massachusetts and the one proposed this week in New York City take hold. On August 1, 2016, Massachusetts became the first State in the nation to prohibit employers from asking about a job applicant’s salary history or past benefits before extending an offer of employment with compensation, in a new pay equity law. Although Massachusetts had already passed a pay equity law requiring equal pay for comparable work back in 1945, this new law goes further.

The Massachusetts pay equity law also prohibits employers from requiring employees not to talk about wages, benefits or other compensation, or not to inquire, discuss or share information about any other employee’s wages, benefits or other compensation. An employee who prevails in a lawsuit under this new pay equity law may also recover his/her reasonable attorneys’ fees and costs.

The law does, however, allow an employer who is sued for alleged violation of the law to raise an affirmative defense to liability by showing that, within 3 years and before the commencement of the action, it had conducted a self-evaluation of its pay practices in good faith and can demonstrate that reasonable progress has been made towards eliminating compensation differentials based on gender for comparable work in accordance with that evaluation. A copy of the Massachusetts bill can be found here: https://malegislature.gov/Bills/189/Senate/S2119.

This provision of Massachusetts’ pay equity law is truly groundbreaking in the United States, and may be one of the first real impactful acts to alter the pay disparity at the outset of employment between men and women performing comparable work.

Why this law when federal and State equal pay laws have been “on the books” for decades? As the Dilbert comic strip makes plain, those laws have largely failed to accomplish their intended purposes. Paying new hires based on salary history rather than market-competitive rates has historically disadvantaged women who may have been victims of wage discrimination at a prior job, taken a break from the workforce to bear children or made other economic sacrifices that later disadvantaged them when they sought new employment despite their performing work comparable to that of their male counterparts.

Massachusetts is now attempting to level the playing field for women by requiring employers to essentially pay women based on their worth to the employer or in the marketplace.

New York City may be next on the gender pay equity path. On the “high heels” of Massachusetts’s law, on August 10, 2016, New York City’s Public Advocate Letitia James announced a proposed bill that also would prohibit New York City employers and employment agencies from asking job applicants about salary history, including benefits. See http://pubadvocate.nyc.gov/news/articles/pa-james-announces-legislation-close-gender-wage-gap.

New York employers may recall that, effective January 19, 2016, New York State amended New York’s Labor Law Section 194, by enacting a gender pay equity law. That law requires that any differential in rate of pay between a man and woman performing the same job be based on a bona fide factor other than sex such as education, training or experience. Such a factor may not be based on a sex-based differential, and must be “job-related and consistent with business necessity.” But the New York State law does not go as far as the one in Massachusetts to prohibit inquiries about salary history.

Like the Massachusetts law, New York State’s gender pay equity law prohibits employers from paying women less than their male counterparts for performing comparable work. Failure to comply with the New York State law may result in liquidated damages of up to 300% of the amount of unpaid wages (you read it right).

As the New York State legislature explained in passing the gender pay equity law last year, “[d]espite existing protections under the law, women in New York earn 84 percent of what men earn and jobs traditionally held by women pay significantly less than jobs predominately employing men. In New York, on average, a woman working full time is paid $42,113 per year, while a man working full time is paid $50,388 per year. This creates a wage gap of $8,275 between full-time working men and women in the state.”

And as noted elsewhere by the New York State legislature, “[d]espite the enactment of the federal Equal Pay Act and the state Equal Pay Law in 1963 and 1966 respectively, there are still incidences of discrimination in pay based on sex.” New York’s gender pay equity law–like Massachusetts’ new law– also prohibits employers from “forbidding employees from sharing wage information that would otherwise deny women workers the ability to discover whether their wages are unequal to their male counterparts” (despite the fact that the National Labor Relations Board had already made it unlawful for many years for covered U.S. employers to prohibit employees from discussing their compensation in the workplace).

Some other States like California have their own equal pay laws as well. California has also introduced legislation that would bar inquiries into a job applicant’s salary history.

In view of the above legal developments and more expected to come throughout the U.S., employers would be well advised to consider reviewing their pay practices and adjusting as needed to ensure that employees performing the same jobs are paid comparably to their counterparts of a different gender and are paid based on their worth to the employer and market-rate, regardless of gender.

The post Is Asking A Job Applicant about Their Past Salary, History? first appeared on Perlman Sandbox.