New York City bans salary histories

A new law will keep past pay out of the hiring process in an effort to give women and people of color a clean slate.

New York City Mayor Bill de Blasio (D) with Reps. Representatives Carolyn Maloney (D) and Nita Lowey (D). CREDIT: AP Photo/Peter Morgan
New York City Mayor Bill de Blasio (D) with Reps. Representatives Carolyn Maloney (D) and Nita Lowey (D). CREDIT: AP Photo/Peter Morgan

If you apply for a job in New York City after October, you might notice a change in the process: your potential employer won’t ask you what you made in your past jobs.

Late last week, Mayor Bill de Blasio (D) signed into law a new measure banning all private companies from asking for a job candidate’s previous salary information or conducting their own inquiry into her salary history. Even if an employer already has access to her past pay, it won’t be able to use that information to determine what salary to offer her.

Employers who willfully violate the law once it takes effect six months from now could face up to a $250,000 penalty.

While the ban will apply to any potential hire, it’s aimed specifically at women and people of color who are, on the whole, paid less than white men.

“The simple fact is that women and people of color are frequently paid less for the same work as their white, male counterparts,” de Blasio said in a statement after signing the legislation. “[T]his bill builds upon the progress we have made to close the pay gap and ensure everyone is treated with the respect they deserve.”

Across the country, women who work full time make just 80 percent, on average, of what men make. The gap emerges for young women fresh out of college in their first jobs, and that difference in pay is only growing. Employers who continue to base compensation at a new job on past salary can end up perpetuating discrimination in women’s earnings. Women still make less than men in virtually every job; women of color, meanwhile, experience even greater pay disparities.

And while it’s technically illegal to pay women less than men for the same work, there are some loopholes that employers can use to drive salaries down. The Equal Pay act of 1963 still allows differences in pay by gender if they’re based on seniority, merit, the quality or quantity of an employee’s work, or “any factor other than sex.”

Late last month, a federal appeals court ruled that it’s legal to pay women less if the difference is based on the fact that they earned less in their previous salaries, arguing that such a reason fits within the Equal Pay Act’s exceptions. In the case, a female employee learned over lunch that she was being paid less than her male colleagues, but her pay was calculated based on what she made in a previous position. The court cited a 1982 ruling that found that employers can use previous salary information to set pay as long as it’s applied reasonably and justified by a business policy.

Banning the reliance on salary histories would end this problem, as well as hold the potential for women to escape any history of discriminatory pay in past work. While some argue women should just drive a harder bargain in negotiating for higher pay at their next job, research has found that they are penalized for acting so aggressively. Getting rid of the reliance on salary histories should, at least in theory, force companies to offer pay based on what they think the job and the candidate is worth on their own.

New York City’s prohibition on salary histories comes after de Blasio had banned their use among government employees, something that has also been put in place across New York State’s government workforce. So far, Massachusetts and Philadelphia have already banned the use of salary histories, and such measures have been considered in a number of other places, including in Congress, where a bill that would cover the entire American workforce was just reintroduced last week.