The employer is also prohibited from relying on the salary history to determine an applicant’s future salary, benefits and other compensations.
Asking about the salary history of job applicants is slowly becoming a taboo. The practice is an effort to weed out another discrimination in hiring as the past salary may influence the interviewee either ways.
After Massachusetts and Phildephia, New York City which has enacted a new law which will be effective from October 31, 2017. The law prohibits companies which have four or more employees from asking about the salary of job applicants, be it current or previous salary.
As per the law, during the hiring process, the employer is prohibited from inquiring about the salary history, or relying on the salary history to determine an applicant’s future salary, benefits and other compensations. According to the law, it is considered a discriminatory practice. However, the applicant can reveal the history of his salary detail, if he wishes so, that too without prompting from the employer. Further, it also prohibits the employer from searching the public records of the applicant to ascertain the salary history.
The new law, however, does not apply to cases where applicants seek transfer or promotion within their current company or in cases of public employees, where the salary is determined in advance through a collective agreement.
The employer retains the right to ask about the salary expectations, benefits or other compensations from the prospective applicant. The employer also has the right to ask about the unvested equity or deferred compensation from the previous company, which the applicant would have received or cancelled.
The employer can also check the background of applicants. However, if the background check reveals the salary history, the employer should not consider it when deciding the compensation. The background check should be done only when the applicant is given the conditional offer of employment which is in line with the New York City Fair Chance Act. According to this act, it is illegal for companies to ask about an applicant’s criminal record until an offer of employment is given.
If any employer violates this law, the applicant has a right to file a civil lawsuit against the employer. The employer may be charged a penalty of up to $125,000 for unintentional violation and up to $250,000 for wilful or intentional violation as enforced by the New York City Commission on Human Rights.
The primary purpose of enacting this law is to remove inequality in pay which is linked by the employer to gender and race. From earlier instances, it was found that queries on salary history led to a perpetual negative effect and even wage discrimination.
On the other hand, the opinion of critics is that it will lead both parties to depend more on salary negotiation.
Employers need to change their hiring practices and comply with the new law which will be effective from October 31, 2017.