Benefits and Compensation

Will Outlawing Questions About Pay History Narrow the Gender Pay Gap?

New York City is the most recent addition to the list of jurisdictions that prohibit employers from asking job applicants about their salary history.  The restriction on pay history inquiries is intended to shift an employer’s focus from a history-based offer to a market-based offer. 

gender gap

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Using pay history as a starting point can mean that workers who entered the job market in lower-paying jobs will continue to be paid at a lower rate.  The summary section of the law explains that adopting measures like the bill “can reduce the likelihood that women will be prejudiced by prior salary levels and help break the cycle of gender pay inequity.”

According to a report from the Bureau of Labor Statistics, for the year 2015, women who worked full time had median weekly earnings that were 81% of their male counterparts’ earnings. It’s an improvement from 1979, the first year that comparable earning data were available.  At that time, women’s earnings were 62% of men’s.

The new law in New York City not only prohibits employers from asking about an applicant’s pay history, it also prohibits employers from trying to get the information from the applicant’s employer, and from conducting a search of public records to try to discover the applicant’s salary history.

The law also prohibits an employer from relying on salary history when determining the salary, benefits, or other compensation during the hiring process, including the negotiation of a contract.  There is an exception if an applicant voluntarily and without prompting discloses his or her salary history.

In that case, an employer may consider the information and may verify it with the applicant’s employer.  However, if the employer inadvertently gets the salary history while conducting a background check, it can’t rely on the information to determine compensation.

This law makes it clear that it doesn’t preclude employers from discussing with an applicant his or her expectations for compensation in the new job.  And the law doesn’t apply to applicants for internal transfer or promotion with their current employer.  The new law takes effect October 31, 2017.

Another city that recently enacted a pay history ordinance has met with opposition from the business community.  Philadelphia’s ban on pay history inquiries was scheduled to take effect last Tuesday—May 23, but the city has postponed implementing the ordinance pending final resolution of a lawsuit brought against the city by the local Chamber of Commerce.

According to a news release issued by the Chamber, “the Ordinance violates employers’ First Amendment rights to ask about, and rely on, wage history, and is not supported by any tangible evidence that these practices perpetuate wage discrimination.”

Currently, the only U.S. state that has a law prohibiting pay history inquiries is Massachusetts.  The law was enacted last year, but doesn’t take effect until July 1, 2018.

Joan FarrellJoan S. Farrell, JD, is a Legal Editor for BLR’s human resources and employment law publications. Ms. Farrell writes extensively on the topics of workplace discrimination, unlawful harassment, retaliation, and reasonable accommodation. She is the editor of the ADA compliance manual—ADA Compliance: Practical Solutions for HR. Before coming to BLR, Ms. Farrell worked as in-house counsel for a multistate employer where she represented management in administrative matters and provided counseling on employment practices.

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