On July 10, 2019, Governor Andrew Cuomo signed a bill that makes the New York Equal Pay Act applicable to every characteristic protected under the Human Rights Law. Employers will soon become liable for pay differentials between employees of different protected areas. These include age; color; creed; disability; domestic violence victim status; familial status; gender identity or expression; marital status; military status; national origin; predisposing genetic characteristics; race; sex; or sexual orientation. Additionally, on the same day, Governor Cuomo signed a new law preventing employers from relying on an applicant’s previous salary to determine either whether to offer them a job or what their salary would be.
Effective October 8, 2019, only those differentials based on factors other than the protected characteristics listed above will justify a pay differential. Employers will still be able to demonstrate that differentials in pay are justified by a seniority system, merit system, a system which measures earnings by quantity or quality of production; or a bona fide factor such as education, training, or experience. However, employees may still prevail on a claim if they can demonstrate that: (i) the employer’s practice causes a disparate impact on the basis of a protected class; (ii) a viable alternative practice exists that would remove the wage differential and serve the same business purpose; and (iii) the employer refused to adopt the alternative practice.
An example of disparate impact can come from the Law School Admission Test (“LSAT”). The LSAT is made up of five sections, one of which is an experimental section that tests questions for future takers of the LSAT. The LSAT could include a seemingly innocuous question about three films at a film festival. If a protected class scored noticeably worse on that particular question during testing, it would be “thrown out” from being used because even though it was a neutral question, it had a disparate impact on a protected class. As applied to an employer, a disparate impact would be a neutral seniority or merit system which consistently resulted in protected classes not receiving pay raises, even if those seniority system or merit system were not intended to have such an effect.
If an employee could show that the employer’s practice had a disparate impact, then the employee would have to show that a viable alternative exists to the practice that, if implemented, would end the disparate impact. In the LSAT example, the creators of the test do this by testing a large quantity of questions and only using those which do not result in the disparate impact of a protected class. Finally, that employee would also need to show that the employer refused to adopt that viable alternative.
The amendment also loosens the criteria for what qualifies as comparable work under the law, replacing “equal work” with “substantially similar work.” “Substantially similar work” is defined in the amendment as work “when viewed as a composite of skill, effort, and responsibility, and performed under similar working conditions.” In short, the comparable work just has to be similar rather than the same.
Prohibited Pay History
Effective January 6, 2020, New York State employers may no longer inquire into an applicant’s or prospective employee’s salary history. This bars employers from requiring applicants to list their previous salary history on applications for employment or a promotion. Additionally, employers cannot ask a prospective employee’s current or former employer about the prospective employee’s salary history.
While the new law prevents employers from inquiring about an applicant’s or employee’s salary history, which is similar to the New York City requirement we previously covered, neither New York State nor New York City prohibit an applicant or employee from voluntarily divulging their compensation history for negotiation purposes. Additionally, under the New York State law, while an employer may not seek an applicant’s or employee’s compensation history, the employer is allowed to verify salary information with a previous employer, so long as both an offer has already been extended to the applicant and the applicant has rejected the initial offer on the basis of the applicant’s previous compensation.
New York State employers should look to ensure that they will be in compliance with these new requirements prior to their effective dates. Please contact us if you or your management team need to update your application and interview materials.