New York’s New Pay Transparency Law - Romano Law

Follow the Money; New York’s New Pay Transparency Law

Follow the Money; New York’s New Pay Transparency Law

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Updated: May 19, 2022

“So, what were you making in your last position?” 

For many, that’s one of the most dreaded questions asked during a job interview or on an application form.  While your future employer may want to know those details, it may seem unfair that your next salary could be determined by what you were making in your last position.  If you’re doing a different job for a brand-new employer, why is your salary history even relevant?

What is it all about?

The New York City Commission on Human Rights (CCHR) asked the same question and came up with this answer: past salary should not be used to determine future earnings.  In October 2017, the CCHR enacted the Local Law 67, making it illegal for employers in New York City to ask about an applicant’s salary history.  The purpose of this law is simple; to help prevent people who may have been underpaid at their previous jobs from being under-compensated in the future.  Now employers will have to rely on a candidate’s experience and qualifications when determining their compensation, not what someone else might have been paying them in the past.

Who does this Law apply to?

All employers throughout New York City must comply with this new law, including:

  • Private employers
  • Public employers
  • Employers of any size

What exactly is prohibited?

The law became effective on October 31, 2017 and it prevents employers from asking applicants about their salary history at any point during the hiring process, including:

  • In the initial job application
  • In advertisements, postings, or descriptions about the job
  • Throughout the entire interview process

Also, the law applies whether the position is full-time, part-time or an internship and even protects independent contractors who don’t have their own employees.

What Is Not Prohibited

While this law applies to many situations regarding conversations about pay, it doesn’t prohibit everything.  Employers can still ask about your salary expectations for your next job or talk about what the compensation for the open position will be.  Be careful with volunteering information!  If you provide your salary or benefits history on your own, without any questioning or prompting from the employer, they can use this to consider your new salary.  Employers may also inquire about your salary history if there are other local, state or federal laws allowing or requiring them to do so.

2022 Update

Labor Law Section 194-a

Recognizing that employers asking for an applicant’s salary history can contribute to unfairly lower compensation and gender pay disparities, the State of New York passed a similar ban which went into effect January 6, 2020.  Labor Law Section 194-a follows the example of Local Law 67 and prohibits employers or their agents from asking about an applicant’s (or current employee’s) previous salaries (including compensation and benefits) in any capacity.  The law also prohibits an employer from relying on salary history in deciding to interview an applicant, make an employment offer or in determining what salary to offer an applicant. 

The state law applies broadly to all public and private employers of any size across New York and protects any applicant not currently employed with that employer, including part-time, seasonal and temporary workers.  The state law does not, however, protect independent contractors unless they work through an employment agency.  This in contrast to Local Law 67.

However, like Local Law 67, employers can ask about an applicant’s salary history where otherwise allowed or required to do so by local, state or federal law.  Employers can also learn an applicants’ salary history if the applicant volunteers that information -for example, if an employee brings up previous pay rates to request a raise or if the employer already knew that information about an employee. 

Instead of directly asking an employee about their salary history, employers are encouraged to ask about an applicant’s salary expectations.

NYC Pay Transparency Law

Continuing the trend of enacting new employee-empowering laws, the New York City Council passed Int. 1208-2018 on January 15, 2022 to require pay transparency from employers within the city.  Specifically, the law provides that when employers with four or more employees post an advertisement for a job position or promotion, the employer must also list the minimum and maximum salary range the employer would pay for that position.

The law directed the New York City Commission on Human Rights to provide clarification on the law’s application and enforcement.  At the end of March 2022, the Commission published its guidance, which explained that the law will apply to an employer with four or more employees even if only one employee works in New York City, regardless of where the other three employees are located.  The Commission also clarified that salary or wage transparency does not include disclosing other forms of benefits, including paid time off, employer-provided insurance or overtime pay.

Int. 1208-2028 was originally set to take effect May 15, 2022, before it received substantial pushback from the city’s business community.  Consequently, on April 28, 2022, the New York City Council amended the law with Int. 134, which pushed the law’s effective date out to November 1, 2022 and provides employers some leeway to comply with the law. 

For example, the amendment explains that rather than letting all applicants sue employers who fail to post their salary ranges, the law only permits current employees to sue their employer for a violation.  The amendment also explains that employers will not be subject to any penalty for their first violation of the new law, if they correct their error and provide a position’s salary range within 30 days of receiving an employee’s complaint. 

Employers who violate these new laws can find themselves in hot water.  Employers that violate the New York City laws can be found guilty of “unlawful discriminatory practices” and may be required to pay a fine, undergo training or pay damages to the potential employee. 

In order to avoid this, best practices should focus the hiring process on the applicant’s skills, credentials and salary requirements that they have sent on their own and making sure that any job postings listed after November 1, 2022 provide a minimum and maximum salary range for that position.  Employers should take the time to educate staff members that will be involved in the hiring process to make sure they are aware of the new requirements.  Employers should also update their employee handbooks to reflect these changes and similarly document the process behind their salary decisions to support the pay ranges they will need to add to their job postings.

New York isn’t the only state with prohibitions on salary history laws, in fact, 20 other states have similar statewide prohibitions.  An increasing number of cities and states, including Washington, Maryland, California, Connecticut, Colorado and Rhode Island have enacted or are in the process of enacting pay transparency laws similar to the New York City Council law.  So, no matter where you end up in your career, it’s important to know the ins and outs of this law so you don’t find yourself in a sticky situation later.

Contact an experienced attorney to learn more about how these recent changes affect your business, or if you would like to know your options as an employee.

Photo by Alexander Mils on Unsplash

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This Blog is made available by Romano Law PLLC for general informational and educational purposes only, not to provide specific legal advice. By using this Blog you understand that there is no attorney client relationship between you and Romano Law PLLC or any individual contributor. You should consult a licensed professional attorney for individual advice regarding your own situation.

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