A Blunt Violation of NYC’s Salary History Law and How To Respond

“What’s your current comp and last five years w2’s?” was the email message received by a senior executive from a Fortune 500 software company’s internal recruiter. I was gobsmacked. Did the Fortune 500 company – quick to publicize their work on pay equality – violate the recent law in NY City related to salary history in such a blunt manner? We asked questions.

Is this a violation?

It’s trickier than it seems on the surface. The first question:   Did the applicant make voluntary disclosure without prompting? Voluntary disclosures allow the company to legally use and verify the information to determine the candidate’s salary, benefits, and other compensation. Because the email message from the company prompted the applicant, there was no voluntary disclosure. Check one for a violation.

Rick Rossein, Professor of Law
, City University of New York School of Law and Author of Employment Discrimination Law and Litigation, explained the second subtlety. “Employers in New York City can ask about “objective measures,” including annual bonuses or variable compensation such as commissions. Since the applicant is in sales, the company bought a little wiggle room by asking about compensation instead of salary.

Still, Rossein views the query as a “clear violation of the New York City Human Rights Law, which makes it an “unlawful discriminatory practice” for an employer to make any salary inquiry of an applicant, or the applicant’s current or former employer, or a current or former employee or agent of the applicant’s current or prior employer.”

Why is financial equality a human right?

“Over a lifetime of work (47 years), the total estimated loss of earnings of women compared to men is $700,000 for a high school graduate, $1.2 million for a college graduate and $2 million for a professional school graduate,” described Prof. Rossein quoting a study.

Detractors most frequently point to personal choice as the reason for the gap. After accounting for a litany of factors-college major, occupation, economic sector, hours worked, months unemployed since graduation, GPA, type of undergraduate institution, institution selectivity, age, geographical region, and marital status-there is still a seven percent hole, unexplained difference in the earnings of male and female college graduates one year after graduation.

“Over our 20 years of collective recruitment experience, we have witnessed time and time again candidates receiving lowball offers from companies who are using their current compensation as a benchmark when we know the budget for the role far exceeds it,” said Rebecca Oppenheim and Gail Tiburzi Buck, Managing Partners at nextOPP Search, an executive recruiting firm that donates career coaching to survivors of domestic violence for each successful placement. “There are many reasons employees are underpaid, some of them budgetary, some discriminatory. If it’s the latter, using current compensation as a benchmark perpetuates that discrimination and prohibits the employee from ever escaping it by moving to another company.”

The job requirements and candidates’ qualifications should determine the compensation. If the candidate possesses the necessary skills and meets the requirements the company has set forth for the position, then they should be compensated accordingly.

Is the NYC human rights law – a law without teeth – because candidates can still be quietly ostracized if they push back?

“Our legal advisors tell us that until it’s passed into federal law, it may be difficult to enforce,” said Oppenheim and Buck. “Because we fully support the principle behind it, we have amended our internal policy to comply with this ruling and follow it to the letter since the salary history ban went into effect in October 2017.”

A lot of internal recruiters go from one company to another within an industry, and external recruiters discuss candidates within certain professions, including providing warnings on which professionals to avoid. “Fear of backlash is huge. It will be difficult to determine why a candidate was not pursued by the employer or recruiter,” agreed Prof. Rossein.   “In the short term, the effectiveness of the law is likely to be minimal. However, it is important to inform the NYC Commission on Human Rights, so it can know possible repeat offenders and commence a Commission-initiated investigation.”

The number to call is 718-722-3131. The fight for pay equality is another version of needing to band together to effect positive change. Corporate power is ever increasing, while the federal government oversight is in retreat.

Prof. Rossein shared a telling example. “The U.S. Equal Employment Opportunity Commission proposed a rule to collect and report the salary data through the annual EEO-1 filing process (see current example from Apple’s website). The proposal would have covered more than 63 million employees, and the data collected would have provided critical insights into the pay gap based on gender, race and ethnicity. However, the Trump Administration nixed the proposed rule.”

While there is plenty of data suggesting a pernicious pay gap, the willingness to not collect data obscures valid ways to address any shortcomings. New York-based professionals need to take advantage of the state government’s desire to hold companies to account and report.

Since the applicant wants the job, what is an appropriate response to the email query that won’t knock them out of consideration?

Rossein suggests following up by stating that you are very interested in the job and would be happy to discuss compensation ranges and goals. A path the team at nextOPP agrees with by “politely stating you are uncomfortable disclosing your current compensation and immediately follow up with your compensation expectations.” Oppenheim and Buck suggest putting forth a range of numbers to show flexibility (just know the hiring company will probably hear the lowest number as their starting point).

There is one exception. If you are in early-stage discussions and don’t feel you know enough about the scope of the role to suggest a compensation range – then say precisely that. Let them know you would be happy to give your compensation expectations once you’re further along in the process and have a better understanding of the position.

For the sales role that sparked this discussion, the candidate provided the compensation information as requested. The company has ghosted them and the professional regrets their response.

At the candidate’s request, I did not disclose the name of the company and continue to encourage the professional to call the NYC Commission on Human Rights. As always, we are all in this together, and everyone deserves a great place to work and fair pay.