How Will The Laws Banning Salary History Affect Your Recruitment Team?

The New York City Council recently approved a bill making it an unlawful discriminatory practice to directly inquire with a candidate about their compensation history. The regulation has been passed in hopes of diminishing gender bias, especially when it comes to the gender pay gap. If your firm or client is already aware of the candidate’s compensation history or becomes aware via a public search, this regulation makes it illegal to rely on that information to develop a new compensation package.

Similar laws have already been passed in California, Massachusetts, Pennsylvania, Delaware, Oregon, New Jersey, Louisiana and Puerto Rico.

• California's Fair Pay Act has taken effect as of January 1, 2017. Additionally, law AB 168 applies to all California employers, including state and local governments, and will take effect on January 1, 2018.
• Massachusetts’ Pay Equity Act will take effect July 1, 2018.
• Philadelphia's Wage Equity Bill is in effect as of May 23, 2017. However, the Chamber of Commerce of Greater Philadelphia filed a lawsuit in federal court on April 6, 2017, challenging the Philadelphia law and seeking an injunction.
• Delaware's pay equity law will be effective December 14th, 2017.
• Oregon's pay equity law is effective October 6, 2017, but will not be enforced until January 1, 2019.
• New Jersey's pay equity law is in effect as of February 1st, 2018.
• Louisiana's pay equity law is in effect as of January 25th, 2017.
• Puerto Rico's law known as the “Puerto Rico Equal Pay Act" is effective immediately. The penalty provisions of Act 16 will not be effective until March 8, 2018, to permit employers to take any mitigating measures.

The Pay Equity for All Act has also been reintroduced into the mix. This bill amends the Fair Labor Standards Act of 1938, making it unlawful for an employer to:

• Screen prospective employees based on their previous wages or salary histories;
• Seek the previous wages or salary history of any prospective employee from any current or former employer of such employee; or
• Discharge or in any other manner retaliate against any current or prospective employee because the employee opposed any act or practice made unlawful by the Act, or made or is about to make a complaint relating to any such act or practice, or testified or is about to testify, assist, or participate in any manner in an investigation or proceeding relating to any such act or practice.

What does this mean for your recruitment team?

If your recruitment team is based in New York City, California, Massachusetts, Delaware, Oregon, Philadelphia or Puerto Rico, you should keep up to date with the latest regulations. Make sure your firm is conscious about the way in which you discuss compensation with your candidates. As this bill goes into effect, you will be prohibited from asking your candidates and any of their employers about their salary history, or even doing public searches on it.

It is important to remember that you can discuss compensation with candidates as long as they volunteer this information. It is also OK to discuss whatever salary expectations the candidates have for the prospective roles.

Reasons your candidates may want to voluntarily disclose this information:

1. Releasing compensation information will save your candidates and clients from wasting time if the projected compensation is completely out of range.

2. Salary data provides competitive intelligence and compensation package data that can be easily leveraged for boosts in package offerings.

3. Revealing this information shows the recruiter and client that you are serious about the position.

Note: Cluen’s synopsis is not a replacement for legal advice from your own attorney (we are not lawyers). Before adopting any new policy, contact your firm’s lawyer(s) to advise on how to properly comply. It is important to make sure your team is in compliance with the latest policies and regulations.

Some suggested next steps for compliance:

1. Remove any questions about compensation from online applications.

2. Create new internal processes for how you vet candidates during the recruitment process.

3. Develop a plan for how your firm will document salary “expectations” rather than current/past figures.

The New York City Commission on Human Rights will be enforcing this new provision. Individuals will have the right to seek action against any employer that violates these new regulations. Penalties will range from $125,000 for an unintentional violation, up to $250,000 for a “willful, wanton or malicious act.” Officially, this law in New York City will go into effect October 31, 2017.

The final takeaway? It’s important to take the time to reevaluate your interview process and make sure your team is in compliance.

*Check out the NYC History Law FAQ

*Check out this Salary Ban Tracker

*Read how to handle tracking deferred compensation or unvested equity here