Race to the Finish: New York Legislature Passes Substantial Equal Pay Changes Just Before Close to 2019 Legislative Session

As part of a marathon finish to the 2019 legislative session, the New York State legislature recently passed two new equal pay bills that build on other state and local laws enacted within recent years. The first of the two bills, Senate Bill No. S5248A, broadens the scope of § 194 of the New York Labor Law (“NYLL”) to establish prohibitions on compensation discrimination between employees performing work that is “substantially similar,” and by prohibiting compensation discrimination on the basis of any protected status or classification under the New York State Human Rights Law (“NYSHRL”). The second bill, Senate Bill No. S6549, establishes a broad proscription on salary history inquiries during the recruitment and hiring process. Together, the bills cement New York’s pay equity regime as among the strongest in the country and introduce new compliance challenges and questions in analyzing employee compensation.

Amendments to New York’s Equal Pay Provisions:

Senate Bill No. S5248-A (“SB S5248-A”) expands the NYLL in two significant ways. First, SB S5248-A amends § 194 of the NYLL to require equal pay for “substantially similar work, when viewed as a composite of skill, effort, responsibility, and performed under similar working conditions.” Previously, the law required equal pay for equal work. SB S5248-A does, on the other hand, leave the existing “same establishment” standard under § 194 intact for analyzing compensation differentials between employees.

The amended NYLL standard raises many unanswered questions about what constitutes “substantially similar work.” The resulting ambiguities are likely to result in highly fact-intensive inquiries about the nature of two or more positions in question that may require litigation to resolve.

Second, the NYLL presently safeguards solely against gender-based compensation discrimination. SB S5248-A amends the NYLL to extend protections against compensation discrimination to all of the same protected classes already covered under the New York State Human Rights law. These classes include age, race, creed, color, national origin, sexual orientation, gender identity or expression, military status, sex, disability, predisposing genetic characteristics, familiar status, marital status, or domestic violence victim status. Following SB S5248-A’s enactment, any compensation discrimination claim under New York law based on an employee’s protected classification will be analyzed consistent with the “substantially similar work” standard.

Under the amended NYLL, employers may defend observed pay differentials between employees by pointing to seniority, merit, and/or the quality and/or quantity of work performed. Additionally, the NYLL amends the existing “bona fide factor other than sex” defense to include any “bona fide factor other than status within one or more protected class or classes.” The defense continues to allow employers to defend observed compensation differentials on the basis of bona fide differences with reference to employees’ respective geography, education, training, or experience, so long as the pay differential is job-related and due to business necessity.

SB5248-A will, if enacted, take effect 90 days after the date of enactment.

Prohibitions on Using and Obtaining Salary History Information:

If signed, Senate Bill No. S6549 (“SB S6549”) would make New York the fourteenth state in the nation to enact prohibitions on the use and solicitation of salary history information. Salary history bans seek to address compensation discrimination by limiting employers from relying on past pay differentials in setting compensation for new employees at unfairly suppressed levels. Common features among such laws include limits on when, if ever, an employer may request an applicant’s salary history information, and prohibitions on adverse actions based on an applicant’s salary history information and/or based on an applicant’s non-disclosure of salary history information.

SB S6549 resembles legislation prohibiting salary history inquiries in many other jurisdictions, including an analogous New York City law that took effect on October 31, 2017. SB S6549 goes further than some comparable laws, however, in prohibiting salary history inquiries with respect to both applicants and current employees. If enacted, SB S6549 will preclude employers with at least four employees from relying on applicants’ and employees’ salary history information in the course of “determining whether to offer employment to such individual or in determining the wages or salary for such individual.”

Other key provisions of SB S6549 will, if signed, prohibit employers from soliciting or requiring an applicant’s or current employee’s salary history information “as a condition to be interviewed, or as a condition of continuing to be considered for an offer of employment, or as a condition of employment or promotion.” The new law prohibits employers from requesting applicants’ prior salary information from the applicant or employee, from an applicant’s or employee’s current or former employer, or from any agent of the applicant or employee. If enacted, SB S6549 will prohibit retaliation in connection with an applicant’s or an employee’s refusal to disclose salary history information, or in response to a complaint regarding an employer’s violation of the law.

SB S6549 does not, however, preclude applicants and current employees from providing employers with information regarding salary expectations, which employers may then consider in making compensation decisions.

Relatedly, SB S6549 permits an applicant or current employee to “voluntarily and without prompting” disclose or verify his or her wage or salary history for purposes including negotiating salary or wages, but, unlike other salary history legislation, does not specify how an employer is permitted to use that voluntarily-disclosed information. For example, SB S6549 does not clarify whether an employer may use a candidate’s voluntarily-disclosed salary history information only to adjust a compensation offer upward, or whether an employer may ever use such information in making a hiring decision.

Likewise, while other salary history legislation that allows employers to confirm applicants’ and/or employees’ freely-disclosed salary history information, the text of SB S6549 specifies that such confirmation is permitted only after an “offer of employment with compensation is made, [and] the applicant or current employee responds to the offer by providing prior wage or salary information to support a wage or salary higher than offered by the employer.” Based on this restriction, SB S6549 appears to prohibit employers from verifying employees’ and/or applicants’ unsolicited salary history information at any point before an employer extends an offer of employment with a determined rate of compensation.

SB S6549 provides a narrow exception for salary history inquiries as required under state or federal law. Remedies under SB S6549 include “compensation for any damages sustained as a result of [a violation of SB S6549],” as well as injunctive relief. Plaintiffs prevailing on a claim arising under SB S6549 may recover attorneys’ fees.

In all, SB S6549 significantly toughens New York’s already formidable pay equity regime. SB S6549 will take effect 180 days after enactment.