The wage gap between men and women has received considerable media attention recently, and new legislation is attempting to improve conditions. Federal law prohibits disparate pay based on gender, but it leaves several loopholes. A new law in New York City is intended to close one of these loopholes by prohibiting employers from asking job applicants for salary history or from using salary history to determine a new employee’s compensation. This practice often perpetuates the wage gap without specifically violating equal pay laws, since female employees’ salary histories are often likely to reflect lower rates of pay than male colleagues. Several jurisdictions around the country have enacted similar laws. New York City’s law will take effect on October 31, 2017.
The federal Equal Pay Act (EPA) of 1963 prohibits employers from paying employees of different sexes at different rates “for equal work” in jobs that require “equal skill, effort, and responsibility…under similar working conditions.” 29 U.S.C. § 206(d)(1). It makes exceptions, however, for wages that are determined based on seniority, merit, “quantity or quality of production,” or “a differential based on any other factor other than sex.” Id. This last exception arguably applies to decisions based on salary history, since the applicant’s gender is not a direct factor in the employer’s calculations. A federal appellate court reached this conclusion recently in Rizo v. Yovino, No. 16-15372, slip op. (9th Cir., Apr. 27, 2017).
New York state law resembled the EPA until 2015, when the legislature passed a bill limiting the “factor other than sex” exception. Under the amended statute, the “factor” cannot be “based upon or derived from a sex-based differential in compensation,” and it must “be job-related…and…consistent with business necessity.” N.Y. Lab. L. § 194(1)(d). Furthermore, a complainant can challenge any “employment practice that causes a disparate impact on the basis of sex.” Id. The New Jersey Legislature passed a bill in 2016 that would have made similar amendments to equal pay provisions, found in N.J. Rev. Stat. § 10:5-12. The governor conditionally vetoed the bill, and the legislature failed to override the veto.
The New York City law addresses one particular “employment practice that causes a disparate impact on the basis of sex.” It adds a new subsection on salary history to the city’s anti-discrimination statute. “Salary history” includes an “applicant’s current or prior wage, benefits or other compensation,” but not “objective measure[s] of…productivity such as revenue, sales, or other production reports.” N.Y.C. Admin. Code § 8-107(25), as amended. Employers may not ask job applicants about their salary history, nor may they use salary history during salary negotiations and decisions.
Massachusetts reportedly became the first jurisdiction in the country to pass a law barring inquiries into salary history last year. That law is not scheduled to take effect, however, until mid-2018. The city of Philadelphia passed a similar law in April 2017. It was to take effect almost immediately, but a federal court granted a request for a preliminary injunction by the local Chamber of Commerce shortly after the bill’s passage. New York City’s law is therefore likely to be the first to take effect.
If you need to speak to a gender discrimination attorney about a matter in New Jersey or New York, contact the Resnick Law Group today online, at 973-781-1204, or at (646) 867-7997.