Pay History Inquiries Banned in the Big Apple

New York City has become the latest jurisdiction to take aim at the lingering issue of pay inequality by prohibiting employers from asking job applicants how much they made in their previous jobs. Mayor Bill de Blasio signed the measure May 4, and it takes effect 180 days later, on Oct. 31.

"It is unacceptable that we’re still fighting for equal pay for equal work. The simple fact is that women and people of color are frequently paid less for the same work as their white, male counterparts," de Blasio said.

The law is intended to combat pay discrimination by breaking cycles of underpayment, according to the bill's lead sponsor, Public Advocate Letitia James. "By prohibiting employers from asking about salary history during the hiring process, we will ensure that being underpaid once does not condemn anyone to a lifetime of inequity," she said.

Similar Laws Elsewhere

The Big Apple isn’t alone in banning salary history inquiries. Similar laws have been passed in Massachusetts, Philadelphia and Puerto Rico.

In general, these measures make it unlawful for employers to seek out details on past compensation before making a job offer, and they also prohibit retaliation against applicants who refuse to disclose their salary histories.

The NYC ordinance defines inquiries broadly to include not only written and verbal requests made of applicants, but also searches of publicly available records. In addition, the term salary history encompasses benefits as well as compensation.

On the other hand, the law contains exclusions that allow employers to avoid liability for certain hiring procedures. For example, employers are free to discuss salary "expectations" with job applicants. In addition, employers won’t run afoul of the law if they inadvertently learn about past compensation when performing background checks or verifying application details, as long as they don’t rely on the salary history information in formulating their offer of employment.

Perhaps the biggest exclusion is a provision that allows voluntary disclosures. If an applicant offers up salary history information "voluntarily and without prompting," the employer can verify the accuracy of the disclosed information and consider salary history in determining the amount of compensation to offer.

Restrictions Face Pushback

Even though most employers support the idea of rooting out pay inequity, they don’t necessarily support measures that make salary history inquiries unlawful.

This pushback is clearly evident in Philadelphia, where the Chamber of Commerce mounted a legal challenge to block that city’s ban on salary history requests. The Philadelphia law was slated to become effective May 23, but the city agreed to delay enforcement in light of the pending litigation.

The ordinance also faces obstacles in the form of legislation proposed by state lawmakers. One bill would add unrelated protections to Pennsylvania’s existing pay bias law but also preempt local ordinances addressing pay discrimination. Another bill contains sweeping preemption language that would prevent municipalities in Pennsylvania from imposing any mandates regarding employer policies or practices.

It remains to be seen whether any of these efforts will derail the Philadelphia ordinance, or whether employer groups will mount similar challenges to other salary history laws. One thing we do know is that legislative trends can quickly spread. Is it at all surprising that the San Francisco Board of Supervisors has introduced a salary history ordinance?

We also know that local actions can have nationwide impact. For example, if a multi-state company reconsiders its approach to salary history inquiries in response to the law in Massachusetts, it could very well alter its practices across the entire country.

Just in case you were wondering, the Puerto Rico law took effect March 8, but employers aren’t liable for violations until March 8, 2018, and the Massachusetts law is slated to take effect July 1, 2018.

Bloomberg BNA’s HR Decision Support Network is your one-stop resource for reliable guidance and analysis in every area of employment-law compliance and HR management. Start your free trial today!