NYC Poised to Ban Firms From Asking Job Candidates About Pay

(Bloomberg) -- The New York City Council is expected to approve Wednesday a measure that will forbid companies from asking job applicants how much they earned in previous positions, a practice some say keeps women from earning as much as men.

“This bill will go a long way in addressing wage disparities women--and particularly women of color--face,” said Public Advocate Letitia James, who sponsored the measure. White women in New York earn on average 84 percent of what white men earn, while Asian women earn 63 percent, black women earn 55 percent and Hispanic women just 46 percent, according to a report from the advocate's office, based on U.S. Census data.

Asking about pay in a job interview hurts women who may start from a lower level than male candidates -- an effect that compounds over time. “It perpetuates discrimination,” James said. “And it has an effect on their pensions as well.”

New York's move follows similar steps in Massachusetts, California and other states and municipalities as concerns grow that the Trump administration will not make pay equity a priority. Last year, Mayor Bill de Blasio banned city agencies from asking about salary history, and he's expected to sign this bill as well. Employers will have 180 days to comply, and workers will be able to make complaints to the city, and offending companies may be subject to fines.

Even after adjusting for factors such as experience, education, job function and geography, women still earn 5.6 percent less than men do nationwide, said Dawn Lyon, chief equal pay officer at job search site Glassdoor.com. And just by asking about past salary, “you're immediately disadvantaging women candidates and perpetuating the problem,” she said.

Many employers have already changed their practices to focus on hiring for skills rather than experience. It also helps to be upfront about the salary range for a position, so that a candidate can decide whether he or she is interested, said Tim McNamara, managing partner at executive search firm Boyden.

The risk when asking for salary history is “some people may correlate a low level of compensation with the value of the individual,” McNamara said. “That's just not true.”

Some New York companies have already adopted the policy. Still, James said, “We've got a lot of work to do, particularly on Wall Street.”

The financial industry -- New York City's largest employer -- has one of the widest gender pay gaps at 6.4 percent. But it's not the worst, according to Glassdoor's adjusted data. Tied for that dubious honor are the health-care and insurance industries, where the adjusted gender pay gap is 7.2 percent.

In a related move, New York City Comptroller Scott Stringer, who oversees the city's $163 billion pension fund, announced that six insurance and health-care companies agreed to disclose “meaningful information” about how they address gender pay equity. The information that AIG, Prudential Financial, Aflac, Allstate, Anthem and United Health Group promise to provide varies and includes plans to publish a report on pay-equity policies to actually making public a gender-pay gap number.

To contact the reporter on this story: Laura Colby in New York at lcolby@bloomberg.net.

To contact the editors responsible for this story: Janet Paskin at jpaskin@bloomberg.net, Rob Golum