October 25th, 2017 | Debbie Lamb, Sterling Talent Solutions

Salary History Bans Laws Expand Across US

In August 2016, Massachusetts was the first state to pass a law preventing employers from asking job candidates about their salary history in an interview. Massachusetts also imposed a ban on employer conduct during the employer-employee relationship, making it illegal for an employer to require employees to refrain from discussing or disclosing their wages, benefits or other compensation. The new salary history ban laws are being enacted in certain cities and states to help reduce the wage gap between men and women workers. According to an American Association of University Women study, the pay gap between men and women starts at college graduation even when the course of study is the same. The organization found on average, women who work full time earn about 80 cents for every dollar a full-time male worker earns. The wage gap persists across all racial and ethnic groups and is found in every state and has been going on for decades.

New Salary History Ban Laws

Since 2016, seven other states and cities have passed salary history banning legislation. Some of these laws have gone into effect, while others will be enacted in the next few years. Each of the cities and states who have passed enacted banning salary history legislation all have a common goal of erasing the pay gap, but each state has unique provisions to their laws. Below are a few examples of the new laws:

Delaware

The salary history law in Delaware (House Bill 1) was signed on June 14th and will go into effect December 2017. The law prohibits salary-based screening of job applicants where prior compensation must satisfy certain minimum or maximum criteria. The law allows for the confirmation of salary history information after a job offer has been made and compensation terms have been determined.

Oregon

Oregon’s Equal Pay Act (House Bill 2005) was signed into law on June 1st and went into effect in September. However, employers cannot be sued for violated pay history violations until January 2019 and won’t face punitive damages until 2024. The law is similar to other state’s salary laws but takes discrimination further. The Oregon Equal Pay Act expands the state’s existing equal pay provisions from gender-based bias to discrimination based on race, color, religion, sexual orientation, national origin, marital status, disability, age or veteran status. The law in Oregon states that pay differences are permitted if they exist due to seniority systems, merit systems, travel, education, training and other factors.

Philadelphia

Philadelphia’s Fair Practices Ordinance (Bill No. 160840) bans pre-employment salary history inquiries,  prohibits reliance on salary history in determining compensation for a new employee and makes it unlawful to retaliate against a prospective employee for failing to comply with any wage history inquiry. The ordinance was supposed to go into effect in May, but it has been put on hold pending a legal challenge by the Philadelphia Chamber of Commerce.

New York City

As of October 31, 2017, New York City will have a new law that prohibits employers in New York City from asking about, relying on or verifying a job applicant’s salary history during the hiring process. The new law amends the NYC Human Rights Law and makes any violation of the law an “unlawful discriminatory practice.” The new law allows employers to discuss with an applicant the proposed or anticipated salary for a position as well as the candidate’s salary expectations. Employers also can consider an employee’s salary history if the applicant’s disclosure is made voluntarily. The law does not prohibit an employer from considering the prior salary history of a current employee who is seeking an internal transfer or promotion.

The New York City Commission on Human Rights published an FAQ guidance on the law specifically mentioning background screening. The law prohibits employers from not only asking about salary history from an applicant or prior employer, but also via public records or background checks. If an employer accidentally uncovers information about an applicant’s salary history when conducting a background check (or otherwise), the employer may not rely on that information in determining what compensation to offer the applicant.

California Law

California is the 8th state and /or local government to prohibit inquiries into an applicant’s salary history.  Assembly Bill 168 enacts Labor Code Section 432.3, which makes it unlawful for California employers to ask job applicants about their salary history, including benefits and/or other compensation information. An employer could be held liable if they ask about salary history when interviewing, extending an offer or deciding how much to pay applicants. If an applicant voluntarily provides their salary history, an employer may consider the information but should do so with great care to avoid any hint of impropriety which could lead to a potential claim. Under the law, employers are also required to give applicants the pay scare for a position upon request. The city of San Francisco recently passed a similar salary ban ordinance with will go into effect on July 1, 2018. The San Francisco law also prevents employers from releasing a current or former employee’s salary without consent.

Due to the growing trend of local and state legislatures enacting similar laws, employers who have offices in multiple states should consider making company-wide changes regarding salary history inquiries during the hiring process. Employers should consult with legal counsel to review and revise all hiring documents employment applications, background check forms, or any other forms used during the hiring process to ensure that there are no inquiries regarding salary history. HR teams, recruiters and hiring managers who conduct interviews of applicants will need to be trained on the implications of the new laws.

It is imperative to stay up-to-date on the latest human resources and background screening trends, laws and compliance standards. Sterling Talent Solutions is here to help with your background screening and onboarding needs. For more information about our background screening capabilities, download our Background Screening 101 eBook today.

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This publication is for informational purposes only and nothing contained in it should be construed as legal advice. We expressly disclaim any warranty or responsibility for damages arising out this information. We encourage you to consult with legal counsel regarding your specific needs. We do not undertake any duty to update previously posted materials.