On April 5, New York City became the latest jurisdiction to enact legislation barring employers from inquiring into a job applicant’s salary history.  Originally introduced last summer at the behest of NYC Public Advocate Letitia James, the bill specifically prohibits businesses from (1) inquiring about the salary history of a job applicant or (2) relying on the salary history of an applicant in determining salary, benefits, or other compensation for such applicant during the hiring process, including the negotiation of a contract.  These prohibitions extend to inquiries made to the applicant him/herself and to his/her current or former employer, as well as searches of public records.  The term “salary history,” as it is used in the law, includes an applicant’s current or prior wage, benefits, or other compensation, but does not include any objective measure of an applicant’s productivity (e.g., revenue, sales, or other production reports).

Despite the broad scope of the law, employers may still, without inquiring about salary history, discuss with applicants their expectations for salary, benefits, and other compensation.  This discussion may touch upon, among other things, any unvested equity or deferred compensation that the applicant would forfeit or have cancelled by virtue of his/her resignation from employment with his/her current employer.  In addition, where an applicant voluntarily and without prompting discloses his/her salary history to an employer, such employer may consider the salary history in determining salary, benefits, and other compensation for the applicant, and may verify the applicant’s salary history.

Notably, the new law does not apply to actions taken by an employer 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.  It similarly does not apply to applicants for internal transfer or promotion within an organization, or to attempts by an employer to verify an applicant’s disclosure of non-salary-related information, or to conduct a background check as permitted by law.  However, if any such verification or background check does disclose the applicant’s salary history, this disclosure may not be relied upon for purposes of determining the applicant’s salary, benefits, or other compensation.

The law will take effect 180 days after it is signed into law by Mayor Bill de Blasio (meaning it will likely become effective next fall).  In the interim, employers should remove questions about salary history from their job applications, and train interviewers and other individuals involved in the hiring process about the restrictions imposed by the new law.