Under the proposed law, current or prospective employees would be permitted to voluntarily disclose salary history, but only for the purpose of negotiating a higher salary.

On January 11, 2019, a bill proposing a statewide salary history inquiry ban, applicable to private and public employers, was introduced in the New York State Assembly.

Currently, pursuant to an executive order, only New York state entities are prohibited from inquiring into an applicant’s compensation history. Only after a state entity extends a conditional offer of employment, inclusive of compensation, can prior salary information be requested and verified.

Assembly Bill S01136 would amend the New York Human Rights Law to make it an “unlawful discriminatory practice” for “any employer, prospective employer, labor organization, employment agency or licensing agency, or employees or agents thereof, to seek a salary history from a prospective employee for an interview or as a condition for employment.” Under the proposed law, current or prospective employees would be permitted to voluntarily disclose salary history, but only for the purpose of negotiating a higher salary. Moreover, a prospective employer would only be able to confirm salary history after the prospective employee gives written authorization, and the employer must keep proof of that authorization.

Renewed Efforts

A similar bill, advanced in the 2017-2018 legislative session, was passed by the Democratic-led Assembly but stalled in the Republican-led Senate. The recent shift in the Senate to a Democratic majority is likely to yield different results for the bill this year. If the bill reaches Governor Andrew M. Cuomo, he will likely sign it into law, as just last year the governor advanced and publicly endorsed similar efforts.

Following in the Footsteps

The bill reflects the rapidly growing trend to advance legislation designed to eliminate the gender pay gap. Advocates assert that basing salary on previous wages compounds the earnings gap; by precluding salary history inquiries, they contend, the unfair compensation cycle can be broken.

In just two years, more than 20 states and localities have enacted some variation of a salary history inquiry ban. California, Connecticut, Delaware, Hawaii, Massachusetts, Michigan, New Jersey, Oregon, Pennsylvania, Puerto Rico, Vermont, San Francisco, Chicago, Louisville, New Orleans, Kansas City, New York City, Philadelphia[1], Pittsburgh and New York’s Albany, Suffolk and Westchester counties are paving the way with their laws for numerous other jurisdictions considering similar measures.

Litigation on the Rise

As new legislation emerges in this relatively uncharted area of law, there will likely be an uptick in pay inequity claims as plaintiffs’ lawyers may contend these state and local laws support their position that inquiry into and reliance on prior compensation is a form of sex-based pay discrimination.

Further complicating matters, the United States Court of Appeals for the Second, Eighth, Tenth and Eleventh Circuits have held that, under the federal Equal Pay Act, prior salary alone cannot justify a pay disparity between male and female employees. On April 9, 2018, the Ninth Circuit held that prior salary alone or in combination with other factors cannot justify a wage differential, essentially precluding employers from considering salary history at all.[2] This ruling deepened the existing Circuit Court split with the Seventh Circuit, which has held that prior salary is always a factor that can justify a pay disparity. The employer in the Ninth Circuit decision has petitioned the Supreme Court of the United States for review. It is possible the Supreme Court will decide whether to grant or deny the writ of certiorari at the Justices’ Conference on Friday, February 15, 2019. If so, the Supreme Court will likely announce its decision on Tuesday, February 19, 2019.

What Does This Mean for Employers?

Employers are left to navigate a complicated patchwork of regulations and contradicting case law. All employers should proceed with caution, and New York employers in particular may want to consider taking steps to mitigate potential risk. The following are examples of safeguards employers can implement even prior to starting the search for potential candidates:

• Recruiters or hiring managers should determine the real market price range for the position through use of external data sources and assess the value of the role for the organization. Internal wage audits, in consultation with counsel, may help in that process.
• Employers should internally document the anticipated salary (or range) for the position.
• Employers should internally document other factors, not related to an applicant’s wage history, that may impact the setting of the future salary, such as an applicant’s relative skill level and experience relative to the position.

For More Information

If you have any questions about this Alert, please contact Eve I. Klein, any of the attorneys in our Employment, Labor, Benefits and Immigration Practice Group or the attorney in the firm with whom you are regularly in contact.

Notes

Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.