New York City Salary Inquiry Ban: How Are Employers Impacted?

Sep 19, 2017
| David Pearson
NYC Salary Inquiry Ban

Employers should always be ready for changes in employment law at all levels of the government. Over the last few decades, more HR-related laws and regulations have been passed than ever before, making human resources much more complicated for business leaders.

One such example is the New York City salary history inquiry ban. Signed into law by NYC Mayor Bill de Blasio on May 4, 2017, the bill is set to go into effect on October 31, 2017. Similar laws have also been passed in Massachusetts, Puerto Rico, and Philadelphia (the ordinance is currently on hold). The driving force behind the New York City law (and other similar laws) is to help eliminate gender pay gaps.

Once enacted, this law will have a few significant impacts for New York City employers. Understanding the new law and what it does and does not allow is extremely important for HR compliance purposes.
 

What Can’t Employers Do?

Once the new law takes effect, employers in New York City will be forbidden to screen potential employees based on their salary and benefits history. Employers will also be unable to seek compensation history from any current or former employer of an applicant.

In addition, it will be unlawful for an employer to:
 
  • Seek salary information from an agent of an applicant’s current or former employer
  • Search publicly available records or reports to obtain salary information
  • If an employer is aware of an applicant’s salary history, they cannot rely on that information when determining the applicant’s new salary
 

Are There Exceptions to the Law?

As with most laws and regulations, there are a few exceptions for employers. Most significantly, if an applicant “voluntarily and without prompting” discloses his or her salary history, then this information can be used by employers to determine salary and compensation. If this occurs, the employer can also verify the applicant’s compensation history.

Under the law, employers are still able to ask and discuss a candidate’s salary and compensation expectations. Employers can also set a targeted salary range and provide applicants with this information.
 

What Doesn’t the Law Cover?

Along with the above exceptions, there are also a few areas where the salary inquiry law does not apply. These include:
 
  • When the disclosure of salary information is authorized under federal, state, or local law
  • Situations where current employees are applying for internal positions or transfers
  • Public positions are excluded when compensation is determined by a collective bargaining agreement
  • Employers can still conduct background checks, but cannot rely on any compensation information that may be obtained from the inquiry.
 

What Should Employers Do in Preparation?

The new law will not go into effect until October 31, 2017, which gives employers a little more than a month to prepare. Staying compliant should be the goal for every company and HR department, and this law is no different.

First, employers should train anyone who is involved in the hiring process on the various aspects of the law. This includes what can and cannot be said or disclosed during the hiring process. Employers need to ensure that their applications don’t ask for any information that will be prohibited by the law.

Employer’s should also revise company policies to ensure an applicant’s history is not sought or obtained during the hiring process, including reference checks. Lastly, employers should modify policies to prohibit employees from disclosing salary history about a current or former employee.
 

What Happens if an Employer Violates the Law?

Like most employment laws, employers who violate the salary inquiry ban can face penalties, mostly in the form of fines and damages. These penalties can be significant to an employer, which is why preparation is important. 

Employers who violate the New York City law can be sued by applicants, who may seek compensatory damages, punitive damages, and attorney fees. In addition, the New York City Commission on Human Rights has the power to enforce the law directly and can impose civil penalties of up to $125,000 for unintentional violations and up to $250,000 for intentional or malicious acts.
 

Employers Must Be Prepared (To Stay Compliant)

We have written before about the importance of being prepared when it comes to employment and HR laws. New regulations are being proposed every month, and the best way for employers to be prepared is to stay on top of the latest news and have a strategy in place to address any potential compliance changes.

For New York City employers, even though the law is only a few weeks away, there is still time to be fully prepared for when it goes into effect. Be sure to take the necessary time to train your staff, seek outside assistance if needed, and take all the necessary internal steps to be ready for this new law.

Want to learn more about PEOs? Check out our eBook, How Well Do You Know PEO? This eBook provides an overview of the PEO industry as well as helpful information for brokers and employers!
 
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