New York City Ban On Applicant Salary History Inquiries Effective October 31, 2017

Q. When will the new salary history law go into effect in New York City?

A. Effective October 31, 2017, employers are barred from asking job applicants in New York City about their salary history. The bill, which was passed by the New York City Council in early April, was signed into law by Mayor Bill di Blasio on May 4, 2017.

Salary history includes “current or prior wage, benefits, or other compensation.” The ban includes inquiries to an applicant’s current or former employer and searches of publicly available information for salary history.

To ensure compliance, employers should ensure that job applications for positions in New York City do not include inquiries about salary history. Employers should also update their internal policies and interviewing guidelines to ensure all relevant personnel are aware of the change.

For additional information, please see our previous post on the new law here:

– Jessica Rothenberg

Philly Wage Ordinance on Hold . . . For Now

Q.  I understand that the Philadelphia Wage Ordinance was supposed to go into effect soon. Do I need to take action to comply now?

A.  As we blogged previously, the new Philadelphia Ordinance would make it unlawful for employers in Philadelphia to inquire about a prospective employee’s wage history or require disclosure of wage history as a condition of employment. Employers would only be permitted to rely on such information if the prospective employee knowingly and willingly disclosed his or her wage history to the employer.

The Ordinance provides that its requirements go into effect on May 23, 2017. On April 6, 2017, however, the Philadelphia Chamber of Commerce brought suit to challenge the Ordinance.  The Chamber filed a motion for a preliminary injunction on the grounds that the ordinance violates the free speech rights of businesses under the First Amendment and is unconstitutionally vague.

On April 19, 2017, the Court issued a temporary restraining order staying the enforcement of the Ordinance until the Court can consider and decide the Chamber’s motion for a preliminary injunction. Thus, at least for now, the Ordinance will not go into effect on its May 23rd effective date.

While the suit has halted the effective date of the Ordinance for the time being, we recommend that employers take steps now to prepare in case the Chamber’s suit is unsuccessful. The Philadelphia Ordinance is one of several initiatives across the country enacted to limit employers’ ability to obtain salary history as part of the interview process, and we expect this trend to continue.

If the Ordinance ultimately is upheld, employers who do business in Philadelphia will have to revise their employment applications to delete any questions inquiring about an applicant’s wage history. Recruiters, HR personnel and managers also may need to be trained about the new law so that these individuals know not to ask wage-based questions during the interview process.  In addition, employers may have to consider revising their Equal Employment Opportunity policies to add wage history to the list of protected categories.

-Tracey E. Diamond

Summer Internships: To Pay or Not to Pay?

Q.  My company is thinking about hiring a summer intern. Is there a requirement that we pay the intern, or can we hire him or her on a voluntary basis?

A.  Now that the weather is getting warmer, many companies are looking at their workforce needs during the summer months. Summer internships provide an excellent way for interns to get much needed “real world” job experience, while helping employers by adding another set of hands to complete projects that have not been completed during the rest of the year.

But must the employer pay for this assistance?

In most instances, the intern must be paid at least minimum wage and overtime for time worked above 40 hours in a workweek. Thus, payment of a small stipend, that does not meet minimum wage requirements, will not be enough.  The Fair Labor Standards Act defines the term “employ” very broadly as including anyone who is “suffered or permitted to work.”  Internships in the “for-profit” private sector will most often be viewed as employment.

There is an exception, however, for interns who receive training for their own educational benefit, if the training meets certain criteria. Courts looks to the following six-part test to determine whether an internship can be voluntary:

  1.  The internship, even though it includes actual operation of the facilities of the employer, is similar to training which would be given in an educational environment;
  2. The internship experience is for the benefit of the intern;
  3. The intern does not displace regular employees, but works under close supervision of existing staff;
  4. The employer that provides the training derives no immediate advantage from the activities of the intern; and on occasion its operations may actually be impeded;
  5. The intern is not necessarily entitled to a job at the conclusion of the internship; and
  6. The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.

If all of the factors listed above are met, the intern is not considered to be “working,” and the Wage Act’s minimum wage and overtime provisions do not apply.

Thus, if the internship program is structured around a classroom or academic experience (such as when the intern receives college credit for the program), as opposed to the employer’s actual operations, then it is more likely that the internship will be viewed as an extension of the individual’s educational experience.

Likewise, if the employer is providing job shadowing opportunities that allow an intern to learn certain functions under the close and constant supervision of regular employees, but the intern performs no or minimal work, the activity is more likely to be viewed as a bona fide education experience and payment is not necessary.

Conversely, if the intern displaces a regular employee and is expected to perform productive work, then the internship is considered to be “employment” and must meet minimum wage and overtime requirements.

Be aware that the test for determining whether an internship is volunteer work is interpreted quite narrowly.  Before hiring that summer intern, think through the above test carefully to see if the internship qualifies for the exception.  Most interns must be paid for their time.

Furthermore, while some employers try to get around the minimum wage laws by hiring their intern as an independent contractor, that relationship can be subject to scrutiny if the relationship is not classified correctly. As a general rule, if the employer expects the intern to work at the job site and provides supervision, the intern will be considered to be an employee and not an independent contractor.

– Tracey E. Diamond

 

New York City Employers May Not Inquire About Applicants’ Salary History

Q.  My company has employees in New York City.  We often ask applicants about their salary history as a starting point for negotiating and setting a new salary.  Are we still permitted to do this?

A.  Effective October 2017, it will be unlawful for employers to ask job applicants in New York City about their salary history.  Salary history includes “current or prior wage, benefits, or other compensation.”  The ban includes inquiries to an applicant’s current or former employer and searches of publicly available information for salary history.

The new law provides that employers can still engage in discussion with an applicant about his/her expectations with respect to salary, benefits, and other compensation, so long as the employer does not inquire about salary history or rely on salary history for determining compensation. Employers can also continue to run background checks and verify an applicant’s disclosure of non-salary related information. However, if the verification or background check discloses the applicant’s salary history, then the employer cannot rely upon it for determining salary.

Prospective employees can volunteer salary history (so long as it is “without prompting”), and in those cases, the employer can consider salary history in determining salary, and can verify the applicant’s salary history.

The new legislation aims to combat pay inequity by preventing employers from perpetuating pay inequity applicants may have experienced in the past. Such legislation has also recently been passed by Philadelphia (effective May 2017), as well as in numerous other cities and states. In 2016, Mayor Bill de Blasio issued an executive order prohibiting New York City agencies from asking prospective employees about their pay history.

The Philadelphia and New York City laws have many similarities. Like the New York City law, the Philadelphia law broadly defines wages as “all earnings of an employee,” including fringe benefits, wage supplements and “other compensation.” The Philadelphia law is enforced by Philadelphia’s Commission on Human Relations, and the New York law is enforced by its equivalent agency, the New York City Commission on Human Rights. Both laws provide that applicants can volunteer salary history, in which case the employer can rely on it to determine the new salary.

To prepare for this law, employers should ensure that job applications for positions in New York City do not ask about salary history. Employers should also update their internal policies and interviewing guidelines to ensure all relevant personnel are aware of the change. Employers who have employees both in and outside of New York City should consider whether to make such changes company-wide, or only to applicants for New York City positions.

Jessica Rothenberg

Philadelphia Employers May Not Ask Wage History Questions Under New Ordinance

Q.  My company is based in Philadelphia.  We often set salaries for new employees based on the applicant’s wage history.  Are we still permitted to do this?

A.  Effective May 23, 2017, a new Philadelphia Ordinance makes it unlawful for employers in Philadelphia to inquire about a prospective employee’s wage history or require disclosure of wage history as a condition of employment.  The law was passed to encourage employers to base salary offers on the job responsibilities of the position sought, rather than on the applicant’s prior wages.  Employers will no longer be able to rely on the wage history of a prospective employee when determining the wages of that individual, unless the individual knowingly and willingly disclosed his or her wage history to the employer.

To ensure compliance with the Ordinance, employers who do business in Philadelphia should start thinking about revising their employment applications to delete any questions inquiring about an applicant’s wage history.  Recruiters, HR personnel and managers will need to be trained about the new law so that these individuals know not to ask wage-based questions during the interview process.  In addition, employers should consider revising their EEO policies to add wage history to the list of protected categories.

-Tracey E. Diamond