On April 5, 2017, the New York City Council passed an amendment to the New York City Human Rights Law prohibiting employers or their agents from inquiring about the salary history of an applicant.  The law also restricts an employer’s ability to rely upon that salary history in determining the salary, benefits or other compensation during the hiring process “including the negotiation of a contract.” The term “salary history” is defined to include current or prior wages, benefits or other compensation, but does not include “objective measures of the applicant’s productivity such as revenue, sales or other production reports.”

There are several notable exceptions to the law. 

• First, it is not a violation of the law to ask the applicant for a proposed or anticipated salary or salary range.  Thus, it is permissible to engage in discussion about expectations with respect to salary, benefits, unvested equity or deferred compensation that would be forfeited.
• Second, it is not unlawful to consider salary history if an applicant “voluntarily and without prompting” discloses salary history.  Moreover, if voluntarily disclosed, an employer is permitted to verify the salary history.
• Third, the law recognizes that employers can run background checks and those background checks might disclose an applicant’s salary history.  However, if salary information is disclosed through an otherwise permissible background check, it still cannot be used to determine salary, benefits or other compensation.
• Fourth, an exception was added to carve out actions “pursuant to any federal, state or local law that specifically authorizes the disclosure or verification of salary history for employment purposes, or specifically requires knowledge of salary history to determine an employee’s compensation.”
• Finally, the prohibition on using salary history does not apply to internal transfers or promotions.

The law was first introduced in August 2016 by New York Public Advocate Letitia James and was celebrated as an effort to eradicate the gender wage gap by “break[ing] the cycle of gender pay inequity.” It now awaits signature by Mayor Bill DeBlasio and will become effective 180 days after it is signed. Mayor DeBlasio has already signed an order prohibiting city agencies from asking job applicants about their salary history, signaling that he is likely to sign this bill into law.  However, there have been reports of potential legal challenges by business groups.  The Chamber of Commerce for Greater Philadelphia filed a challenge to a similar ordinance in Philadelphia that was awaiting mayoral signature, contending that the law impedes on Free Speech without any evidence of a connection between salary history and gender-based wage disparities.

Despite the possibility of a legal challenge, employers in New York City should begin reviewing their hiring policies and practices, including employment applications, to determine what changes may be needed to ensure compliance with this new law.