New York State Strengthens Its Wage Laws
New York is joining the growing number of states that have beefed up their equal pay laws. On July 10, 2019, before the New York ticker tape parade celebrating the US Women’s Soccer team’s World Cup Win, Governor Cuomo signed two bills, the Fair Pay Act and the Salary History Ban Law, and added his voice and support to the US Team’s own equal pay efforts. New York’s Fair Pay Act broadens the equal pay requirements to prohibit wage disparity on the basis of any protected characteristic, not just gender.
Fair Pay Act
The Fair Pay Act prohibits differential pay on the basis of membership in a protected class where the two workers perform equal work, meaning services that require equal skill, effort or responsibility and are performed under similar working conditions. In addition, it prohibits pay disparity on the basis of a protected class where the work performed is “substantially similar” as measured by the skill, effort or responsibility involved.
Employers may pay differential wages under a limited set of exceptions:
- Under a seniority system;
- A merit system;
- A system that measures the quality or quantity of production; or
- Based upon a job related bona fide factor such as education, training, or experience.
In what appears to be a substantial departure from the “business judgment” rule, which preserves an employer’s right to make operational decisions in the best interest of the company, an employee may defeat one of these exceptions by demonstrating the following:
- The employment practice used results in a disparate impact upon a protected class;
- There is an alternate employment practice that would serve the same business interest and will not result in a disparate impact; and
- The employer has refused to adopt the alternative practice.
The Act imposes a civil penalty of $500 for each violation. If this is interpreted as “per each pay check,” the impact can be quite substantial. The law becomes effective in 90 days.
Salary History Ban Law
The second new law prohibits employers from inquiring about salary or wage history during the application, interview or offer stage, or retaliating against any person who refuses to provide information or complains about a violation of the Salary Ban Law. Employers are also prohibited from inquiring about salary history from an applicant’s current or former employers. The only exception is if an applicant discloses his or her salary history in salary negotiations or to justify a salary demand. In those circumstances, the employer has a limited exception to verify or request the information from a prior employer. The Salary Ban Law goes into effect in six months and the New York Department of Labor promises to conduct a public awareness campaign. Notably, New York City already has a robust salary history ban that applies to all public and private employers, regardless of size, who hire employees in the City of New York. The City’s law prohibits employers from inquiring about salary history in the interview and hiring process, including asking references for salary history. The New York City law does not prohibit employment candidates from volunteering such information and if they do so, employers can verify that information in making a compensation offer.
If you have questions about either of these new laws, your compensation practices or any other employment issue, please call Vanessa M. Kelly or the Clark Hill PLC attorney with whom you work.