Pay Equity Policy for U.S.-Based Engagements

In an effort to address the issue of pay inequality for women and minorities, a number of state and local jurisdictions have enacted legislation barring the use of historical compensation information during the hiring process. The first of these laws is scheduled to go into effect in New York City on October 31, 2017, with California following close behind with a similar law, effective January 1, 2018. Additionally, a number of other jurisdictions such as Massachusetts, Delaware, New Jersey, Philadelphia, San Francisco and Puerto Rico have implemented or are considering similar laws.

In order to comply with these new laws, Heidrick & Struggles has implemented a new nationwide policy for our search assignments so that we will no longer ask for or use candidates’ historical compensation information.

However, if both the position for a particular engagement and the client are based in a jurisdiction that has no legislative or regulatory restrictions prohibiting inquiries regarding compensation history, the client may elect to opt-out of the firm’s nationwide policy.

What you need to know about the NYC legislation and our policy:

What we CANNOT ask:

• Questions about salary/compensation history from prospects and candidates;
• Questions asking prospects or candidates to complete or turn over compensation documentation;
• Follow-up or pointed salary history questions if a candidate knowingly and willingly volunteers their salary history;
• Questions regarding a candidate’s leave behind compensation (e.g., compensation earned or awarded but not yet paid or vested) to screen candidates or set compensation for the role; or
• Using legally obtained salary history to set wages or make employment decisions.

What we CAN ask:

• Questions about the candidate’s expectations or requirements for salary, benefits, bonus or commission structure;
• Questions about unvested equity or deferred compensation that the candidate would forfeit or have cancelled in connection with the candidate’s resignation from the candidate’s current employer;
• Questions about competing offers and the candidate’s expectations for a competitive offer, excluding any current compensation information;
• Questions about objective indicators of the candidate’s work productivity in their current or prior jobs, such as revenue, sales, production reports, profits generated or books of business; or
• Questions about work history, responsibilities, education, and achievements.

Frequently Asked Questions

Which jurisdictions have passed legislation?
Legislation has been enacted in Philadelphia (stayed TBD), Oregon (effective October 9, 2017), New York City (effective October 31, 2017), Delaware (effective December 14, 2017), California and San Francisco (effective January 1, 2018), Puerto Rico (effective March 8, 2018), and Massachusetts (effective July 1, 2018). Additionally, numerous other jurisdictions including Georgia, New Jersey, Pennsylvania, Texas and Washington are considering similar legislation.

Does it matter which office the consultant works from?
No, the policy applies to all U.S.-based searches, regardless of where the consultant sits. For example, if a consultant is based in the United Kingdom but is conducting a search for a position in New York City, the consultant would be expected to comply with the policy as the role will be based in the United States.

Can the client verify someone's unvested equity or deferred compensation after they've accepted an offer?
Yes, if a candidate provides information about deferred compensation that may be cancelled or forfeited upon resignation, the employer is permitted to request documentation to verify those amounts once the employment offer has been accepted.

What if the client wants to opt-out of Heidrick & Struggles' policy?
Where both the position for a particular engagement and the client are based in a jurisdiction that has no legislative or regulatory restrictions prohibiting inquiries regarding Compensation History, clients will have the option to opt-out of Heidrick & Struggles’ nationwide policy by signing an Opt-Out Form. For more information regarding this option, please contact your Heidrick & Struggles consultant.

Questions & Concerns

Please do not hesitate to reach out to your contact(s) at Heidrick & Struggles with any questions regarding the policy.

This is information purposes only and should not be considered legal advice. Please contact your legal counsel for detail and advice on how your organization is impacted by this legislation.