Most people agree with the concept of equal pay for equal work. Over the last few years, a significant number of states and cities have passed laws that preclude employers from asking for compensation history information from applicants and prospective employees. The goal of these laws is to ensure that compensation is based on job-relevant criteria, and stop perpetuating existing pay disparities by relying on past compensation.
At this point there are more than 20 jurisdictions that prohibit, or will soon prohibit, asking applicants and prospective employees about historical compensation data. It is critical for employers to take a note of this trend and be informed, as consequences for noncompliance vary significantly.
While there is variation among jurisdictions, below are examples of recurring trends in the salary history ban laws:
Employers cannot seek salary history information about an applicant, whether orally or in writing; or personally or through an agent.
Employers cannot rely on an applicant's salary history information as "a factor" in determining whether to hire the applicant; or what salary to offer the applicant.
Employers cannot use an applicant's failure to provide their wage history to refuse to interview, hire, promote, or employ the applicant, or retaliate against the applicant.
Release the salary history of current or former employees to their prospective employers unless the employer receives written authorization from the current or former employee, or the release of salary history is required by law, or the salary history is publicly available, or the salary history is subject to a CBA.
Discharge or discriminate or retaliate against an employee for invoking the wage rate history ban on behalf of anyone, or assisting in the enforcement of the wage rate history ban.
Employers may consider or rely on voluntarily disclosed (without prompting) salary history information in determining the applicant's salary.
Employers may ask an applicant about "his or her salary expectation for the position being applied for."
Potential Penalties for Employers (significant variation by jurisdiction):
Back pay for up to three years
$1,000 and $5,000 (inclusive) for the first offense (for penalty purposes, unlawful conduct regarding interviewing and hiring for a single position is a single violation)
$5,000 and $10,000 (inclusive) for each subsequent violation.
Special damages up to $10,000
Compensatory damages. If special damages are available, compensatory damages are recoverable to the extent they exceed the amount of special damages
Legal and equitable relief, including:
payment of lost wage rates
Reasonable costs, including attorney's fees
If you have, or plan to have employees in these jurisdictions, the time to act is now: Alabama, California, Colorado, Connecticut, Delaware, Atlanta, Georgia, Hawaii, Illinois, Kansas City, Missouri, Maine, Massachusetts, Missouri, New Jersey, New York, Cincinnati, Ohio, Toledo, Ohio, Oregon, Vermont, Washington, Puerto Rico. Because of how quickly new jurisdictions pass laws, it is always best to check on your specific jurisdiction if it is not on the list provided.
The worst and most expensive thing for employers to do in the jurisdictions where some variation of the salary history ban has been, or is about to be implemented, is wait. The cost of compliance is not nearly as high as cost of non-compliance. While there is additional burden on the employer, a number of simple changes will get you to a much better risk posture.
Here are your first three actions steps:
Understand the restrictions in the states you recruit in.
Review your existing recruiting systems and documents for compliance and make adjustments as necessary.
Ensure proper training of personnel that is involved in recruiting and hiring.
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