Our guest blogger is Anthony Carabba, Jr., who has been an employment lawyer for nearly 25 years and is the founder of Carabba Law P.C., a New York City employment law boutique. Anthony assists organizations and individuals in navigating all aspects of the complex, ever-changing employment law landscape. He may be reached at 212.430.6400 or firstname.lastname@example.org.
In a swell of recent legislative activity with particular importance to recruiters, numerous states and cities have banned employers — as well as their agents and employment agencies — from asking job applicants about their current or prior salary history during the hiring process. New York City recently enacted such a ban, joining Massachusetts, California, Delaware, Oregon, San Francisco and Philadelphia. It’s a hot-button issue, with numerous other states and municipalities considering enacting similar bans, while many businesses remain opposed. In one noteworthy development, the Philadelphia Chamber of Commerce sued the City of Philadelphia to stop the enforcement its ban. The ban is now stayed pending court determination.
The rationale behind these laws is the elimination of the “gender-based pay gap.” According to numerous studies, women earn, on average, 79% of what men earn. By preventing employers from using prior compensation as a factor in setting future pay, women would not automatically receive lower offers and the cycle of inequality would end — at least according those who advocate for the bans. Thus, the new legislation forces employers to focus on the worth of the work, rather than prior earnings.
Although each jurisdiction’s ban varies somewhat in scope and content, an overview of the New York City ban is illustrative. Effective October 31, 2017, all employers in New York City, regardless of size, are prohibited from making any inquiry into an applicant’s salary history, even with a disclaimer that responses are purely voluntary. The ban applies not only to direct requests, such as those in interviews or employment applications, it also prohibits employers from attempting to learn an applicant’s salary from sources other than the applicant, such as through public records searches. Even if an employer accidentally discovers the salary information, by for example learning it when searching other publicly-available information, it nonetheless cannot be used. Take note, the definition of “salary” history is broad — the ban prohibits more than inquiries into base pay, it also prohibits questions about bonuses, car allowances, retirement plans, etc.
So what types of pre-employment negotiations are allowed under New York City ban? An employer is permitted to ask about an applicant’s salary expectations and demands. Also, if an applicant “voluntarily and without prompting” discloses their salary history, the employer may use the information in determining its salary offer. Further, an employer may ask about objective measures of an applicant’s productivity, such as the size of the applicant’s book of business, profits generated, or other objective indicia of performance. Lastly, an employer can ask about the value of any competing offers made to the applicant, as well as any unvested or deferred compensation that will be forfeited if the applicant resigns.
Recruiters be aware: pursuant to guidance from the New York City Commission on Human Rights (the “Commission”), the government agency responsible for enforcing the New York City ban, “headhunters” are not exempt under the law and, therefore, headhunters who are deemed employers, employment agencies or agents of an employer, or who “aid and abet” a violation of the law, may be themselves liable under the law. Moreover, be mindful that, in terms of the geographic scope of the ban, the Commission says if an applicant is asked about salary history in New York City, the ban would apply even if the potential job is not in New York City or the employee is not a New York City resident. Finally, the Commission indicates that employers, considering hiring temp employees placed through a temp agency to a permanent position, may consider the value of what it pays the temp agency in calculating the offer the employee. However, the employer may not ask what the temp agency pays the temp employee, unless the employer and the temp agency are deemed joint employers, in which case the hire is akin to an internal transfer rather than a “new” hire covered by the ban.
As this is a newly evolving area of the law, employers and recruiters should be mindful to check their jurisdictions to ensure compliance with any salary history bans. Remember to check often, because even if no ban exists in your jurisdiction today, one could be passed down the road.