Big Apple Salary Inquiry Ban a New Obstacle for Employers

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By Martin Berman-Gorvine

State and local bans on employers asking about job applicants’ salary history, like one that takes effect in New York City in October, can have unintended consequences, presenting new challenges for employers, attorneys assert.

The Big Apple’s new law has a loophole involving applicants who voluntarily disclose their salary history to potential employers. But employers should keep a record of which applicants have chosen to do so and ensure that the proportion of those who disclose doesn’t reach a high level, like 80 percent, David Wirtz, a shareholder in the New York City office of management-side law firm Littler Mendelson, told Bloomberg BNA July 11.

Such a figure would likely attract the “suspicions” of the city’s Department of Consumer Affairs, which has a special unit to enforce the salary history law and related statutes, he said.

“While this carve-out makes sense, it does lay the groundwork for litigation over what is or is not voluntary,” Lawrence Peikes, a partner at Wiggin and Dana LLP in Stamford, Conn., told Bloomberg BNA in a July 11 email. “So in that sense the law has the potential to generate even more employment-related lawsuits. This illustrates the problem with this sort of granular legislation.”

Another headache for New York City employers is that the law doesn’t define what an employer is, so one must assume it applies to all employers, no matter how small, Anthony A. Mingione, a partner in the labor and employment practice group of Blank Rome LLP, said in a July 11 webinar sponsored by the management-side law firm.

Also, he said, “you can’t use somebody else to get the information that you can’t ask for under this law,” such as an employment agency.

Right or Wrong Way to Do It?

Peikes and Wirtz both praised the “intent” of such laws, which are meant to help address gender- and race-based pay inequity, but they questioned whether the statute will actually reduce such bias.

“It’s not a practical solution,” Peikes argued. “Salary history can be helpful in determining whether an applicant is appropriate for a particular role. For example, if a candidate’s current salary is well above the amount the employer is prepared to pay, this is a good indicator that the position is ill-fitting.”

Employers could get around the prohibition “by asking the applicant about his or her salary expectations or demands, which will basically get you the same information,” Peikes said. On the other hand, disappointed applicants will have new grounds for lawsuits even if they aren’t justified, he said.

Will Curb Bias, Plaintiffs’ Attorney Says

But plaintiffs’ attorney Mike Pospis of Pospis Law PLLC in New York City views things very differently.

“I think these laws are a wonderful idea, for at least the reason that they will be instrumental in stemming the propagation of baked-in gender and race-based pay inequality,” he told Bloomberg BNA in a July 11 email.

Employers affected by New York City’s law or other similar laws “should check every piece of paper in the hiring process” and train interviewers, Wirtz said.

“The most important thing is to understand the law wherever the company has employees,” Miriam Geraghty Petrillo, a partner in the Chicago office of management-side law firm Baker McKenzie, told Bloomberg BNA July 11.

To contact the reporter on this story: Martin Berman-Gorvine in Washington at mbermangorvine@bna.com

To contact the editor responsible for this story: Tony Harris at tharris@bna.com

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