New Pay Equity Laws in New York and New Jersey (Again) (Update: New Jersey Law Signed Into Law)

Seyfarth Synopsis: This week, New York state expanded a state Equal Pay Act, making it illegal to pay someone less based on characteristics including race, religion, disability or gender identity, and also other protected characteristics.  New York state also passed a salary history ban.  Also, just one state over, on June 20, 2019, the New Jersey Legislature passed a salary history ban and New Jersey Governor Phil Murphy is expected to sign the measure into law.

UPDATE: The New Jersey law was signed by Governor Murphy on July 25, 2019.  The New Jersey law goes into effect on January 1, 2020

Changes to the New York State Laws

This week, New York state enacted two new pay equity laws.  The first modified the state’s equal pay law and the second will ban employers from seeking salary history from applicants or current employees.  Key provisions of these laws are summarized below.

Previous Modifications to the New York State Pay Equity Law

In November 2015, New York State became one of the first jurisdictions to pass a pay equity law that was more extensive than the federal equal pay laws.  When this law went into effect in January 2016, New York Labor Law § 194 was amended to:

• Outline the geographic scope of who could be compared under the pay equity law;
• Put the burden on employers to affirmatively demonstrate that any pay differences are based on one or more of a limited number of factors. The permitted reasons for differences in pay are:
  • A seniority system;
  • A merit system;
  • A system that measures earnings by quantity or quality of production; or
  • A bona fide factor other than sex such as education, training, or experience.  This bona fide factor exception will replace the “any other factor other than sex” language in the current law, and will apply only if the employer demonstrates that the factor is not based on or derived from a sex-based differential in compensation, is job related with respect to the position in question, and is consistent with a “business necessity” (i.e., the factor relied upon effectively fulfills the business purpose it is supposed to serve).  But this defense will not apply if there is an employment practice that causes a disparate impact, or if the employer refuses to adopt a neutral alternative practice that would serve the same business need.
• Prohibit employers from prohibiting employees from inquiring about, discussing, or disclosing wage information, and
• Increase the liquidated damages for willful violations of § 194 to 300% of wages due.

These prohibitions were expanded with the amendment of Section §194, which was signed by Governor Cuomo this week.

Expanded New York State Pay Equity Law

The revisions to New York Labor Law § 194 signed by Governor Cuomo on Wednesday, July 10, 2019, will expand upon the equal pay law in meaningful ways.

First, the New York state law makes it illegal pay someone less based on characteristics beyond just sex including age, race, creed, color, national origin, sexual orientation, gender identity or expression, military status, sex, disability,  predisposing genetic characteristics, familial status, marital status, or domestic violence victim status.  In this regard, New York state will join other jurisdictions, like New Jersey and Washington State, to have a very expansive view of who is protected under the pay laws. 

Second, the New York equal pay act was amended to allow employees can be compared even if they do not hold the “same” job. The new law would require only a showing that the employees are engaged in “substantially similar work, when viewed as a composite of skill, effort, and responsibility, and performed under similar working conditions.”  Like similar expansions in California, New Jersey, Massachusetts, and elsewhere, this will increase the scope of who can be compared under these pay equity laws. 

In combination, these provisions further expand upon the protections under the federal pay equity laws and will make it more challenging, and more important, for employers to be attuned to how employees are paid.

New York State Salary History Ban

The expanded pay equity law was not the only law signed into law on Wednesday in New York state.  Governor Cuomo also signed into law a salary history ban, adding a new section to New York Labor Law § 194-a.

With the passage of this law, New York State will join many other states and jurisdictions with a salary history ban that applies to applicants for employment.[1]

Like many of the salary history bans the New York State law will:

• Forbid employers from orally or in writing seeking, requesting, or requiring the wage or salary history from an applicant or current employee as a condition to be interviewed, or as a condition of continuing to be considered for an offer of employment, or as a condition of employment or promotion. Employers also cannot seek wage or salary history from a current or former employer, current or former employee, or agent of the applicant or current employee's current or former employer.
• Prohibit employers from relying on the wage or salary history of an applicant in determining whether to offer employment to such individual or in determining the wages or salary for such individual.
• Prohibit employers from refusing to interview, hire, promote, otherwise employ, or otherwise retaliate against an applicant or current employee based upon prior wage or salary history, the refusal to provide the same, or because the individual filed a complaint with the department alleging a violation of the law.

What is different from some of the other salary history bans -- for example, in California, is that this law also applies to current employees.

Exceptions to the New York Salary History Ban Law

While employers are forbidden to ask about prior wages, the law does not prevent an applicant or current employee from voluntarily, and without prompting, disclosing or verifying wage or salary history, including but not limited to for the purposes of negotiating wages or salary.

Further, the New York state law allows employers to confirm wage or salary history if, at the time an offer of employment with compensation is made, the applicant or current employee responds to the offer by providing prior wage or salary information to support a wage or salary higher than offered by the employer.

Finally, the law makes clear that it does not supersede any federal, state or local law enacted prior to the effective date of this section that requires the  disclosure or verification of salary history information to determine an employee's compensation.

Damages Under New York State Salary History Ban

The law provides a private right of action to applicants or current or former employee. The court may award injunctive relief as well as  reasonable attorneys' fees to a plaintiff who prevails in a civil action brought under this paragraph.

The New York pay equity law goes into effect on October 8, 2019 and the New York state salary history ban law goes into effect on January 6, 2020.

The New Jersey Salary History Ban Law

Just across the border, New Jersey made modifications to its state pay equity laws.

More than a year after passing the sweeping pay equity legislation known as the “Diane B. Allen Equal Pay Act,” the New Jersey Legislature passed Assembly Bill 1094 on June 20, 2019, which would amend existing law to prohibit employers from screening applicants based on salary history, requiring applicants to satisfy any minimum or maximum salary criteria, or considering an applicant’s refusal to volunteer salary history information in any employment decisions. The Act also provides that a violation of these provisions would be an unlawful employment practice under the Law Against Discrimination (“LAD”), if the applicant is a member of a protected class.

This is the second attempt to pass salary history legislation in New Jersey.  On July 31, 2017, former Governor Chris Christie vetoed a similar bill passed by the legislature. Governor Phil Murphy was widely expected to sign A1094 into law. On January 16, 2018, Governor Murphy signed an executive order banning salary history inquiries by state governmental entities. In doing so, he urged the legislature to pass a statewide ban on the practice and pledged to sign any such legislation that landed on his desk. And Governor Murphy signed the salary history bill impacting private employers into law on July 25, 2019.

Key provisions of the Act are summarized below.

Unlawful to Screen Any Applicant Based on Salary History in New Jersey

Like in many other jurisdictions, as noted above, the New Jersey Act prohibits an employer from screening any job applicant based on salary history, including but not limited to wages, salaries, or benefits.

It would also prohibit an employer from requiring an applicant’s salary history to satisfy any minimum or maximum criteria.

Additionally, the Act would prohibit an employer from considering an applicant’s refusal to volunteer salary history in any employment decisions. Any violation by an employer of the aforementioned salary history inquiry prohibitions would also be an unlawful employment practice in violation of the LAD if the applicant is a member of any of the protected classes enumerated in the LAD.

Exceptions to the New Jersey Salary History Ban Law

The New Jersey Act contains several notable exceptions.

First, if an applicant voluntarily provides an employer with salary history information, the employer would be allowed to:

• Consider the applicant’s salary history in determining compensation for the applicant; and
• Verify the salary history information voluntarily provided.

Second, after an offer of employment that includes an explanation of compensation has been extended to an applicant, an employer would be allowed to request that the applicant provide a written authorization to confirm the previous salary history.

Third, employers are not prohibited from acquiring salary history information that is publicly available, but shall not retain or consider that information when determining the salary, benefits, or other compensation of the applicant unless the applicant voluntarily, without employer prompting or coercion, provides the employer with salary history. Importantly, an applicant’s refusal to volunteer this information may not be considered by the employer in any employment decisions.

Further, the provisions of the Act would not apply to:

• Applications for internal transfer or promotion under the same employer;
• An employer’s use of previous knowledge acquired as a result of an applicant’s prior employment with the employer;
• Actions taken by an employer pursuant to a federal law or regulation that requires disclosure, verification, or use of salary history for employment purposes;
• An employer’s attempt to obtain or verify an applicant’s disclosure of non-salary-related information when conducting a background screening, provided that the employer specifies that salary history is not to be disclosed when requesting information for the background check. However, if salary history is nonetheless disclosed, the employer would be prohibited from retaining the information or considering it when determining compensation for the applicant; or
• An employer’s inquiries regarding an applicant’s previous experience with incentive and commission plans, provided that the compensation package for the position for which the applicant is being considered includes an incentive or commission component and the employer does not seek information regarding the applicant’s previous earnings in connection with any incentive or commission plan.  

No provision of the Act would prohibit employers from:

• Offering an applicant information regarding compensation set by law or a collective bargaining agreement, and paying the applicant according to this information if hired;
• Including a salary history inquiry on a job application if the employer does business, employs persons, or takes applications in at least one state besides New Jersey, provided it is permissible in that state and that the application contains a notice immediately preceding the inquiry that instructs New Jersey applicants not to answer

Civil Penalties For Violations of the New Jersey Salary History Ban

An employer that violates the Act would be liable for a civil penalty not to exceed:

• $1,000 for the first violation;
• $5,000 for the second violation; and
• $10,000 for each subsequent violation.

Interestingly, the Act makes clear that an award of neither attorney’s fees nor punitive damages would be available as a remedy for any violation of the salary history inquiry prohibition.

The law goes into effect on January 1, 2020.

What’s Next for New York or New Jersey Employers?

These developments follow the trend of the equal pay movement taking place in cities and states nationwide. In light of New York and New Jersey’s focus on equal pay, employers should be mindful of these new restrictions and evaluate how the new legislation would impact their hiring practices.