As we previously reported in April of 2017 and May of 2017, New York City employers may want to prepare for the New York City salary history law, which will go into effect on October 31, 2017. With limited exceptions, the law prohibits employers from asking applicants about their current or prior compensation, or relying upon salary history to determine an applicant’s compensation. In advance of the law’s effective date, the New York City Commission on Human Rights published fact sheets and answers to frequently asked questions (FAQs) to clarify the scope of the new law. The law itself will be codified under the New York City Human Rights Law (NYCHRL) at New York City Administrative Code Section 8-107(25). Below is a non-exhaustive summary of the Commission’s FAQ guidance.

Applicability

As confirmed by the Commission, the salary history law applies to all employers in New York City, regardless of size. The law is not retroactive; it will not be enforced against actions taken prior to the law’s effective date of October 31, 2017.

Like the NYCHRL, the salary history law is silent on jurisdictional reach. Not surprisingly, the Commission has taken an expansive yet non-definitive view and explained the following:

• If an unlawful inquiry into salary history occurs during “an in-person conversation in New York City, there will likely be jurisdiction because the impact of the unlawful discriminatory practice is felt in New York City.”

• If an unlawful inquiry into salary history occurs outside of New York City, “there could be jurisdiction if the impact of the unlawful discriminatory practice is felt in New York City.”

The Commission further explained that “[e]ntities should apply the same jurisdictional analysis in this context that they would involving other areas of the City Human Rights Law (e.g., in the employment context, residency in New York City alone, without more, is generally not enough to establish impact in New York City).” This explanation appears to point toward the standard enumerated by the New York State Court of Appeals in Hoffman v. Parade Publications, which held that an impact analysis “confines the protections of the NYCHRL to those who are meant to be protected—those who work in the city,” as opposed to “nonresidents who have, at most, tangential contacts with the city.”

However, the Commission’s FAQs leave open as a prima facie matter whether New York City residents who apply for jobs outside of the city are protected by the law. In such circumstances, New York City residents may enjoy the salary history law’s protection outside of the city depending upon the particular circumstances, i.e., whether the impact of the practice is “felt in New York City.”

Permissible and Impermissible Inquiries

The Commission’s FAQs describe certain scenarios when employers “can and cannot” inquire or learn about an applicant’s salary history.

Voluntary Disclosures: The salary history law permits employers to consider an applicant’s salary history if the applicant discloses the information “voluntarily and without prompting.” The Commission’s FAQs emphasize that “[a] disclosure of salary history is ‘without prompting’ if the average job applicant would not think that the employer encouraged the disclosure based on the overall context and the employer’s words or actions.”

Job Applications: A job application cannot request information about applicants’ compensation histories, even if the employer allows the response to be voluntary. However, employers may include questions on job applications about compensation “expectations or demands.”

Multistate Applications: Importantly, the Commission’s FAQs state that “an employer who uses a boilerplate application that requests salary history information will not avoid liability simply by adding a disclaimer that individuals in New York City or applying for jobs located in New York City need not answer the question.” Multistate employers should therefore ensure that their New York City job application forms conform to the requirements of the salary history law.

Productivity Measures: While the law states that “‘[s]alary history’ does not include any objective measure of the applicant’s productivity such as revenue, sales, or other production reports,” the Commission’s FAQs emphasize that questions about commissions or profits earned are considered prohibited inquiries into salary history. Instead, employers may inquire about the type, value, and structure of deferred or unvested compensation, or the size of an applicant’s book of business and profits generated, which are considered “objective indicators of performance.”

Competing Offers: The Commission’s FAQs state that a prospective employer may ask an applicant about competing offers and counteroffers that the applicant has received and the value of those offers. 

Information Available From Other Sources: According to the Commission’s FAQs, employers may not “ask people from the applicant’s current or former place of employment or search public records for information about the applicant’s salary history.” If an employer accidentally uncovers information about an applicant’s salary history by, for example, searching publicly available information about the applicant, the employer may not rely upon that information in determining what salary and benefits to offer the applicant.

“Compensation” Is Broadly Defined

The salary history law prohibits employers from relying on salary history to determine an applicant’s “salary, benefits, and other compensation.” The Commission’s FAQs advise that ‘“benefits’ and ‘other compensation’” must be read broadly and “may include many factors, including, but not limited to, a car allowance, retirement plan, or bonuses.”

Narrow Exemptions

The Commission’s FAQs state that there are no exemptions under the law for:

• actions taken by an employer pursuant to foreign or international law that authorizes the disclosure of salary history or requires knowledge of salary history;

• private positions for which compensation is set pursuant to procedures established by collective bargaining; or

• actions taken by headhunters, recruiters, and agents, who also may be held liable if they intentionally aid and abet a violation of the law.

In the context of a corporate acquisition, the Commission’s FAQs state that “the employees of the target company are not ‘job applicants’ for the purposes of the salary history law.” But, if employees of the target company must interview with the acquiring company, the FAQ sheet states that the salary history law “may be implicated.”

Key Takeaways

In advance of the salary history law’s effective date, New York City employers may want to consider taking the following actions:

• Employers may want to review their job applications (including national applications) to ensure that they not seek or require applicants to disclose their prior salaries, benefits, or other compensation.

• Employers may want to review their handbook policies and company procedures to ensure that inquiries about applicants’ salary histories are prohibited during job interviews and reference checks. For instance, employers can analyze their interview scripts and verify that the focus is on discussions of skills, qualifications, and salary demands and expectations.

• Any agents, recruiters, or headhunters involved in the recruitment process can be instructed to comply with the law.

• For open positions, employers may want to consider setting a salary or salary range as part of the job posting prior to interviewing candidates.

• In the event that an applicant discloses his or her salary history, employers may want to consider obtaining documentation from the applicant that he or she did so voluntarily and unprompted.

We will continue to monitor developments on this legislation and provide further guidance as it becomes available. In addition, our colleagues in California are monitoring a similar salary history law that will take effect as of January 1, 2018.