Signed into law by Mayor Bill de Blasio on May 4, 2017, a new measure designed to close the gender wage gap will take effect on October 31. An amendment to the New York City Human Rights Law, the legislation makes it illegal for an employer to look into an applicant’s salary history. City lawmakers believe questions about salary history can lead to discriminatory payment practices.
Under the law, employers may not search publicly-available databases to investigate an applicant’s past earnings. Likewise, they cannot ask applicants about their salary history, including any benefits packages or other forms of compensation they’ve received. Additionally, employers are not allowed to base a potential new hire’s compensation and benefits on what they’ve been paid in the past, unless the applicant volunteers this information without being asked.
Consequences for non-compliance
Failure to comply with the new legislation carries considerable sanctions. The New York Commission on Human Rights may impose a civil penalty of up to $125,000 for an unintentional violation. When offenses are considered “willful and malicious,” the maximum penalty is double that amount. Individuals who have a grievance can file a lawsuit, and if the court rules in their favor, they can be awarded attorneys’ fees,
Individuals who believe they are the victim of discriminatory practices can also file a lawsuit. If successful, they can be awarded attorneys’ fees, backpay, and compensatory damages.
What employers can do
Employers are not completely prohibited from talking to applicants about compensation. They can ask job candidates about their salary and benefits expectations, and whether they will have to forfeit any deferred compensation or unvested equity if they leave their current position.
Employers can also take proactive steps to ensure that they comply with the new mandate and avoid costly consequences. They should use this time before the law takes effect to update job applications, removing any questions pertaining to compensation history. Business owners, managers, HR teams, recruiters and anyone else involved in the hiring process should be on the same page about what is expected.
Preparing for compliance can serve as an opportunity for employers to review all their personnel policies– especially recruiting and hiring– to be sure they are not inadvertently endorsing practices that could be considered discriminatory.