November 10th, 2017 | Debbie Lamb, Sterling Talent Solutions

New York City Enacts Salary History Ban Law for 2017 – Sterling

Since 2016, eight states and cities have passed salary history ban legislation. Some of these laws have gone into effect, while others will be enacted over the next few years. The laws intend to eliminate the “pay gap,” suggesting that a previous salary history could lead to gender-based wage discrimination. Each state or municipality has unique provisions to their salary history banning laws. New York City recently enacted a new law that prohibits employers in the city from asking about, relying on or verifying a job applicant’s salary history during the hiring process.

New York City’s Salary History Ban Law

The new law amends the NYC Human Rights Law considers it a discriminatory practice to inquire about salary history or search for publicly available records or reports related to salary or rely on the salary history of an applicant to determine salary at any stage of the employment process, unless unprompted and provided willingly by the applicant.

The salary history ban law applies to job interviews that occur in New York City, determined by where the interviewer is located regardless of where the job is located. The FAQ from the City Commission discloses that the law will not apply where an applicant simply resides in New York City, but is interviewed and will work outside of the city. However, the Commission states that if the employer asks a candidate about salary history during a job interview that occurs in New York City, even for a job based outside of the City, the law may apply.  The law applies to temporary employees or contractors who are subsequently offered permanent employment for the same or comparable position. Applicants for internal transfer or promotion are not protected by the Salary History Law. The law generally will not apply to former employers who disclose information about salary history to the hiring employer.

The penalties for noncompliance with the law could be very high. The New York City Commission on Human Rights could impose a civil penalty of up to $125,000 for an unintentional violation and up to $250,000 if the violation is willful and malicious. An individual who wins a civil lawsuit may recover back pay, front pay, compensatory damages and attorney’s fees.

Allowances of the Salary History Ban Law

The new law allows employers to discuss with an applicant the proposed or anticipated salary for a position as well as the candidate’s salary expectations. Employers also can consider an employee’s salary history if the applicant’s disclosure is made voluntarily. The law does not prohibit an employer from considering the prior salary history of a current employee who is seeking an internal transfer or promotion.

How Will the Salary History Ban Laws Affect the Background Screening Industry?

The New York City Commission on Human Rights published an FAQ guidance on the law specifically mentioning background screening. The law prohibits employers from not only asking about salary history from an applicant or prior employer, but also via public records or background checks. In circumstances where an employer is legally permitted to perform a background check before a conditional offer has been made, or runs a background check after a conditional offer, the Commission recommends that employers specify to their background screening company or reporting agencies that information about salary history must be excluded from the report.

If an employer accidentally uncovers information about an applicant’s salary history when conducting a background check (or otherwise), the employer may not rely on that information in determining what compensation to offer the applicant. The Commission FAQs suggest that it is a best practice to redact or exclude salary history from such reports. Employers should also remove all requests for current or prior salary on their job applications, particularly where it might be sent to a candidate for a job in New York City. The Commission recommends that Consumer Reporting Agencies (CRA) should consider no longer verifying salary information for applicants in New York City or applicants for jobs in New York City.  Also, where CRAs collect W-2 or other tax reporting forms from candidates, they should redact salary history.

Review Recruiting, Hiring and Background Screening Processes

The Commission recommends that employers focus questions on applicants’ salary demands, skills and qualifications. Hiring managers need to move away from salary discussions in interviews and instead focus on the applicant’s salary demands. Organizations need to consult with legal counsel to review and modify written policies, employment applications, job postings and any forms used during the hiring process. Companies need to educate interviewers and hiring staff to prohibit inquiries about applicant’s salary history. Due to the growing trend of local and state legislatures enacting similar laws, employers who have offices in multiple states should consider making company-wide changes regarding salary history inquiries during the hiring process.

It is imperative to stay up-to-date on the latest human resources and background screening trends, laws and compliance standards. Sterling is here to help with your background screening and onboarding needs. For more information about our background screening capabilities, download our Background Screening 101 eBook today.

Sterling is not a law firm. This publication is for informational purposes only and nothing contained in it should be construed as legal advice. We expressly disclaim any warranty or responsibility for damages arising out this information. We encourage you to consult with legal counsel regarding your specific needs. We do not undertake any duty to update previously posted materials.