New York City has joined a growing number of cities and states passing employment laws restricting questions about pay history during the hiring process.
The new law is part of a larger effort to address gender pay inequality in the workplace. Here’s an overview of this new law, others like it and steps employers should take going forward.
Bans on Salary History Questions
The New York City Council is making it unlawful discriminatory practice to ask job applicants about pay history or to use previous levels of pay to determine new salary levels.
It will also be illegal to ask a previous employer about an applicant’s salary level or even search for pay history in public records.
The new law will not apply to salaries of current employees transferring to another position or receiving a promotion. Nor will it apply to salaries of public employees set by collective bargaining agreements.
Additionally, the law does not apply in situations where job applicants volunteer their salary history without prompting from a prospective employer. In that case, employers may use the information to determine pay level.
New York City’s legislation is similar to legislation passed by Philadelphia, which became the first U.S. city to pass this type of legislation in January 2017.
In Philadelphia, employers are not allowed to ask about pay history, make disclosure of pay history a condition of employment or retaliate against job applicants for not disclosing salary history. Even if employers stumble upon the information, they cannot use it unless job applicants knowingly provide it to them.
The Larger Picture
This legislation against pay history inquiries is just one piece of a larger picture regarding equal pay for women.
Federal law already prohibits gender-based pay discrimination, but violations are hard to prove and wage gaps persist in nearly every industry. Nationally, women are paid 79 cents for every dollar that men earn, according to the United States Census Bureau. A number of factors affect that statistic, including the career fields women choose, but economists consistently find evidence of pay disparities not offset by other variables…
Businesses are also beginning to talk more openly about the often uncomfortable things those audits find. PricewaterhouseCoopers published the results of a pay analysis it did of its British staff. It found a 15.1 percent pay disparity between men and women, and changed its promotion practices to bring more women into senior leadership roles. Salesforce, a cloud software company, says it spent $3 million last year to raise the salaries of female employees to match their male counterparts.
New Wave of Legislation
Cities and states across the country are increasingly debating and passing legislation aimed at bridging the gender pay gap.
On the federal level, legislators may reintroduce a bill from 2016—the Paycheck Fairness Act—that also makes it illegal to inquire about salary history.
In August 2016, Massachusetts became the first state to pass this type of legislation.
According to the National Women’s Law Center (NWLC), Massachusetts’ new law addresses pay equality by defining “comparable work” for employers, enabling employees to discuss compensation with each other without risk of reprisal and forbids inquiries into a job applicant’s salary history.
The salary history provision is what makes Massachusetts’ equal pay bill a real trailblazer. When an employer relies on a job candidate’s prior salary in hiring or in setting pay, any pay disparity or discrimination from past employment is replicated and perpetuated throughout a woman’s career.
For example, if a woman candidate’s prior employer discriminated against her in setting her pay, or she worked in a female-dominated profession where pay is lower precisely because women do the jobs and “women’s work” is devalued, and the new employer sets her pay based on that prior job’s salary, the pay discrimination that candidate faced in her previous job will follow her. And job candidates who reduced their hours in their prior job, or left their prior job for several years, to care for children or other family members are penalized when employers set compensation based on prior salaries.
Steps Employers Should Take
This type of legislation will affect how companies go about the hiring process, at least in regard to setting salary.
At the moment, only a few cities and a handful of states have passed legislation, but many more states and cities are looking to do so.
According to the Society for Human Resource Management (SHRM), employers will have to rely on objective market data to set salary levels. They will have to be careful to avoid discussions about previous salary levels in the hiring process. And they will have to prepare themselves for employees discussing salary levels and make sure they address pay equality across their workforce.
[Denise Visconti of Littler] advised employers to include a strong non-retaliation provision in their policies and handbooks, clearly stating that employees are allowed to ask about their pay as well as their co-workers’ pay and also to help their co-workers exercise these rights without fear of retaliation or adverse action.
Employers should also review and update their employment policies to see that they don’t prohibit employees from discussing wages. Complaint procedures should be reviewed and employees encouraged to ask questions about the process…
Finally, employers need to take a hard look at their compensation policies, including the guidelines given to supervisors, to ensure that they clearly lay out the company’s compensation policy and that they are in compliance with what their jurisdiction requires.
Salary History Questions Off Limits
New York City joins Philadelphia and the District of Columbia, among others, in enacting legislation that makes it illegal for employers to inquire about a job applicant’s salary history.
The new law is part of a larger push to address gender pay inequality in the workplace. It’s just the latest in a wave of new laws appearing across the country. Here’s a list (via SHRM).
States with legislation addressing gender pay equality:
States considering legislation: