New York State Releases Guidance on Salary History Ban

Act Now Advisory

New York’s salary history ban (“Law”) becomes effective today, January 6, 2020. To help employers comply with their obligations under the Law and to advise employees of their rights, the state has issued guidance (“Guidance”).

As detailed in our earlier Advisory, the Law prohibits all New York State employers from:

  • relying on a job applicant’s wage or salary history in determining whether to offer employment to that individual or in deciding the salary to offer (except as discussed below);
  • requesting or requiring, either orally or in writing, an applicant’s or current employee’s salary history as a condition to being interviewed or considered for an offer of employment, or as a condition of employment or promotion, unless such information is required pursuant to federal, state, or local law;
  • seeking an applicant’s or employee’s wage history from a current or former employer (except as discussed below); and
  • refusing to interview, hire, or promote, or otherwise retaliating against, an applicant or current employee: (i) based upon his or her salary history, (ii) because the applicant or employee refused to provide his or her salary history, or (iii) because such individual filed a complaint with the New York Department of Labor alleging a violation of the Law.

New Guidance Provided for Employers

Current Employees

The Law is unique among other salary history bans in that it explicitly includes current employees in the restrictions noted above. The Guidance clarifies that, while employers, may not ask current employees about pay from previous jobs, employers may “consider information already in their possession for existing employees (i.e.[,] a current employee’s current salary or benefits being paid by that employer). For example, an employer may use an employee’s current salary to calculate a raise but may not ask that employee about pay from other jobs” (emphasis added). A “current employee” includes a current employee of the employer, “its parent company or a subsidiary.”

Thus, employers may consider the salary and compensation of a current employee who is applying for a new position within the same company, when deciding what compensation to offer. Employers are still prohibited, however, from using a current employee’s salary as a selection criteria in choosing to interview the candidate or provide the current employee with the new position.[1]

Voluntary Disclosures

Prior to the Guidance, it was unclear whether employers could use voluntarily provided salary history information to set compensation levels—the Law made clear only that such information could be used to “verify” its accuracy. The Guidance now clarifies that “[i]f an applicant voluntarily and without prompting discloses salary history information, the prospective employer may factor in that voluntarily disclosed information in determining the salary for that person.” The Guidance makes clear, however, that “‘optional’ salary history question[s] on a job application” will be considered prompting by the employer, and are not acceptable.

The Guidance also states that employers may not rely on voluntarily disclosed salary history information “to justify a pay difference between employees of different or various protected classes who are performing substantially similar work,” as such reliance would violate the State’s Equal Pay Act. While perhaps implied, this specific prohibition is not expressly contained in that statute.

Other Clarifications

The Guidance further makes clear that “salary history information” includes “compensation and benefits” and that an “applicant” includes “part-time, seasonal and temporary workers, regardless of their immigration status.” Additionally, the Guidance expressly allows employers to inquire into an applicant’s salary expectations.

Notable Differences Between State and City Law

As we previously reported, New York City’s salary history ban went into effect October 10, 2017. While the Law largely mirrors the City’s salary history ban, they differ in the following respects:

  • Current Employees: The New York City law applies only to applicants, not to current employees; the State Law bars salary history inquiries of both applicants and current staff seeking promotions or transfers. Employers in New York City should note that the Law controls on this issue and update their policies accordingly.
  • Information About Compensation: The Law broadly prohibits employers from seeking any information about compensation. The New York City law explicitly allows employers to ask candidates about deferred compensation or unvested equity that an applicant would have to forego in taking a new job. Similarly, under the City law’s guidance, employers are permitted to ask for the value of any counteroffers, but this is not currently permitted under the State Law or its guidance. On these issues, until further guidance is made available, the State Law will control.
  • Independent Contractors: The Law does not apply to “bona fide independent contractors, freelance workers, or other contract workers unless they are to work through an employment agency.” As we recently reported, New York City has enacted a law that appears to extend all aspects of the City’s Human Rights Law (including the City’s salary history ban) to such workers. Thus, on this issue, City employers must follow City law (we are hoping for guidance from the City on this and other questions about the new City law).

What New York Employers Should Do Now

  • Review and, if necessary, revise current hiring and promotion practices and forms to ensure that neither job applications nor interviewers seek salary history information. The Guidance suggests that an employer may wish to “proactively state in job postings that it does not seek salary history information from job applicants.”
  • Ensure that any disclosure of salary history is done on a purely voluntary basis (and without prompting). This means that it is not permissible to pose a question about an applicant’s salary history with a caveat that answering the question is voluntary.
  • If an applicant voluntarily discloses salary history information at any point during the hiring process, create a “memo to file” (or other internal documentation) noting that the applicant voluntarily disclosed this information and the circumstances surrounding such disclosure.
  • If the services of an employment agency are engaged in connection with an offer of employment, make sure the agency complies with the new prohibition on salary history inquiries.
  • Train human resources staff and hiring managers on the Law and any new policies implemented to ensure compliance with it.

* * * *

For more information about this Advisory, please contact:

Susan Gross Sholinsky
New York
212-351-4789
[email protected]

Nancy Gunzenhauser Popper
New York
212-351-3758
[email protected]

Amanda M. Gómez
New York
212-351-4711
[email protected]

ENDNOTE

[1] For example, if Mary earns $150,000 per year at XYZ Company, and applies for an internal position that has an expected salary around $50,000, XYZ Company cannot refuse to interview Mary simply because her salary is too high. This is also true if Mary earns $25,000 per year and is applying for an internal position at XYZ Company that is budgeted for $50,000 per year. If XYZ Company determines that Mary is the best candidate, it can consider Mary’s current salary as an XYZ Company employee in deciding what salary to offer.