Earlier this month, the New York City Council approved a bill that would prohibit NYC employers from inquiring about an applicant’s salary history during all stages of the employment process. NYC employers should take a close look at the bill and revamp their hiring procedures to be compliant.
In the event that an employer is already aware of a prospective employee’s salary history, this bill would prohibit reliance on that information in the determination of salary. Under the bill, “salary history” includes the applicant’s current or prior wage, benefits, or other compensation.
The bill does come with a few caveats. For example, if the applicant voluntarily and without prompting discloses salary history to an employer, the employer may consider salary history in determining salary, benefits, and other compensation for the applicant.
Additionally, the bill does not apply under three sets of circumstances: 1) Employers acting pursuant to any federal, state, or local law that specifically authorizes the disclosure or verification of salary history for employment purposes; 2) Current employees seeking an internal transfer or promotion with their current employer; 3) Public sector employees for which compensation is determined by a collective bargaining agreement.
The rationale behind the bill is to help reduce pay inequality. According to the sponsors of the bill, when employers rely on salary histories to determine compensation, they perpetuate the gender wage gap. Adopting measures like this bill can therefore reduce the likelihood that women will be prejudiced by prior salary levels and help break the cycle of gender pay inequity.
Other localities, including Philadelphia, have passed similar measures — but not without challenges. Philadelphia’s wage equity law, which is to go into effect on May 23, has been challenged by the Philadelphia Chamber of Commerce. Earlier this month, the Chamber of Commerce filed a lawsuit in federal court seeking an injunction to prevent the law from coming into effect, arguing it is invalid based on protection of freedom of speech. NYC’s bill has not been challenged, but some predict it may be.
NYC Mayor Bill de Blasio is expected to sign the bill soon. The bill will then become effective 180 days after signing.
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