New York City Council Passes Bill Banning Inquiry Into Salary History in Hiring: Amendment to the NYC Human Rights Law Makes It an Unlawful Discriminatory Practice for Employers to Ask Applicants to Disclose Salary History, but Employers May Consider Such Information if Volunteered by Candidate Without Prompting

Sullivan & Cromwell LLP - April 20, 2017

On April 5, 2017, the New York City Council passed an amendment to the New York City Human Rights Law that will make it an unlawful discriminatory practice for employers to inquire about the salary history of an applicant for employment or to rely on the applicant’s salary history in determining the compensation to be offered.  Mayor Bill de Blasio is expected to sign the bill within the next week, and the law will take effect 180 days thereafter.  The law contains a number of exceptions.  Its prohibition will not apply if an applicant “voluntarily and without prompting” discloses his or her salary history; in that situation, an employer may consider the volunteered information in determining anticipated compensation and also may verify the proffered salary history.  Employers also will be permitted to engage in a discussion with an applicant about his or her “expectations with respect to salary, benefits and other compensation,” including amounts of “unvested equity or deferred compensation that an applicant would forfeit” by virtue of leaving his or her current employer.  The rationale for the law is the belief by its proponents that employers’ reliance on salary history to set compensation exacerbates a gender wage gap.  This law represents a significant, government-mandated restriction on what have been fairly commonplace employer practices.  A similar salary-history ban passed by the Philadelphia City Council has been challenged on constitutional grounds; this law may face a similar challenge.  During the 180-day period before effectiveness, New York City employers will need to review their hiring practices and documentation carefully, as well as to advise those engaged in hiring on compliance with the new restrictions.