Here’s everything you need
to know about the new law.
Drew
Angerer/Getty Images
Pretty soon, businesses won’t be able to ask employees or job
candidates about their
salary history in New York City.
The New York City Council recently passed public advocate
Letitia James’s bill, effectively killing
compensation-related interview questions.
Business Insider spoke with
Jason Habinsky, a New York-based employment lawyer and a
partner at the law firm Haynes and Boone, about what
organizations, employees, and job candidates can expect going
forward.
Changes won’t happen straightaway
To become a law, the bill still needs a signature from New York
City Mayor Bill De Blasio. He’s expected to sign the legislation
shortly. After that, there will be a 180 day roll out period.
“It gives some time for employers to make sure they’re in
compliance,” Habinsky says.
Employers will need to do a careful review
The new law will prohibit employers from requesting a job
applicant or employee’s salary history and using that information
to determine their new salary. In order to comply with those new
roles, Habinsky says that employers must make sure they do a
thorough internal review.
“First of all, employers need to promptly audit and review their
documentation regarding the hiring process,” he says. “In other
words, make sure that their job applications, their background
check documents, the policies and procedures, all do not include
questions regarding salary history and compensation history. They
should do a very specific review and audit of their information
to make sure those questions aren’t included.”
He also notes that employees, especially human resources
personnel or any staffers involved in the hiring process, should
probably receive additional training.
“Make sure they know about the new law and what it entails and
what it prohibits,” Habinsky says. “Make sure those employees
aren’t asking those questions or addressing those questions in
interviews during the hiring process.”
… and check with their third-party recruiters, hiring firms, or
background check companies
“Employers should make sure to be in communication with any third
parties or outside vendors who participate in the hiring process,
if they use placement firms or recruiters, to make sure those
organizations or individuals aren’t supplying this information,”
he says. “Even if the employer isn’t asking about or looking for
this salary information, all it would take is for a recruiter to
send over the information in an email or document.”
There are a few exceptions to the law
The law doesn’t go both ways. Employees and job candidates are
still free to share their salary history.
“Then, in fact, the employer has that information and can react
to that and use that,” Habinsky says. “That’s a clear exception
in the law.”
What’s more, employers can ask an employee or prospective hire
about their expectations regarding compensation, without asking
about prior salaries.
“There can be some discussion, but you have to be very careful
not to cross the line,” he says.
The penalties for violating the ban are pretty serious
Habinsky says that the law essentially amends the New York City
Human Rights Law, which prohibits discrimination in several
categories, including employment.
As a result, there are two ways in which individuals can bring
action against employers who violate the rule. People can file an
action with the City Commission on Human Rights, who would
investigate their claims. If city officials found probable cause
for a violation, a hearing would take place and the commission
would determine whether the employer was liable.
Individuals can also file a complaint in court. Either way, if
the city or court rules in favor of the plaintiff, they could be
in line to receive damages. The city can also choose to issue
civil penalties against the employer. Habinsky says that if the
city found that the employer was “willful and malicious” about
violating the law, the penalties could clock in at $250,000.
It’s important to watch what happens in Philadelphia
As
Philly.com reported, Philadelphia’s Chamber of Commerce
is pushing back against a similar ruling by stating their plans
to file a lawsuit against the city.
“There’s definitely two sides to the argument,” Habinsky says.
“Some employers will see this as depriving them of information
which they could use to make good decisions.”
He says that it’s possible that some entity will attempt to
pursue similar action in New York City, but they might be waiting
to see the outcome of the Philadelphia suit.
The legislation could clear the way for big lawsuits
Habinsky broke down a hypothetical scenario involving an employer
that breaks the law by leaving a question about salary
information on their job applications. He says that the nature of
the rule could leave such an organization open for a major
lawsuit.
“That’s not just a violation against one person, but against
every employee they’ve hired during that period of time,” he
says. “It does open up the door for group actions or collective
actions.”
It could also have an impact beyond New York
Many international and national businesses operate within New
York City. As a result, the law may end up sending aftershocks
far beyond the Big Apple.
“One easy way to make sure you’re in compliance with employment
laws nationwide or state-wide, depending on how vast your
business is, is to pick the strictest law and then comply with
that across the board,” Habinsky says. “In other words, even if
other states or cities don’t have a requirement or a ban on
requesting salary information, you apply it universally or
uniformly, outside of New York City as well. It’s a lot easier to
administer and there are also good reasons for doing it. The
purpose of the law is to not perpetuate discrepancies or gaps in
pay and equity. There’s a good reason behind it and you can
accomplish that beyond the state or city where it’s required.”
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