We’re not kidding! Early in May of this year, New York City Mayor, Bill de Blasio (D), signed a new provision in the New York City Human Rights Law, which prohibits a prospective employer from asking any questions about an applicant’s previous compensation. This law has an effective date of October 31, 2017—Happy Halloween!

Ostensibly, any voluntary disclosures of prior salary history by an aspiring applicant will not trigger an unlawful discrimination charge against the employer. Such a codicil is obviously toxic to prospective employers, giving rise to any number of “he said—she said” scenarios, many of which may lead to lawsuits, which will be virtually indefensible and costly. In short, even applicants who want to volunteer salary history will be met with the interviewer throwing their hands over their ears while shouting “nana…nana…nana.”

Isn’t Life Tough Enough?

The hedge fund industry is already up to its nostrils in regulation, and now, this brilliant piece of legislation. Of course, it is not the mere existence of this new law that creates the problem…the problem is in its potential for abuse.

The Rationale Behind the Law

Closing the wage gap between women and men is the stated goal of this legislative handiwork. How it accomplishes this goal is less clear. One’s salary can be average, above average or lower than average. Isn’t there a danger that those earning an above average salary for their level of experience and skill set are disadvantaged by this law? Aren’t men and women with an above average salary history harmed by this legislation? How many applicants will be walking away from the job interview because they were low-balled on compensation? Mr. de Blasio, can you tell us?

Salary Negotiations

When an applicant receives the thumbs up and salary negotiations begin—where do they begin? Might they commence with the applicant’s current level of compensation?

As it stands, while the law does not prohibit an employer and an applicant from discussing compensation expectations, it does appear to leave the prospective employer vulnerable to false accusations by unscrupulous applicants.

Then there is the question of the background check, most of which will include a credit report. How will prospective employers be expected to handle unintentional, but innocent, income disclosures revealed in the course of a background investigation?

So Many Questions and So Few Answers

To be fair, this law is applicable to all New York City employers. However, lawsuits tend to be filed against those with the deepest pockets. New York City hedge funds need to have a long huddle with legal counsel before this law goes into full force and effect.

If misery loves company, take heart. Similar laws are in place in Delaware, Massachusetts, and Philadelphia, to name a few. Moreover, similar legislation is under consideration by a number of other state and municipal legislatures. Clearly, there will soon be no place to hide from this dazzling legal concept, which has the potential to cause more harm than good.

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