Insights

New Jersey is the 17^th U.S. State to enact restrictions on employers’ inquiry into and use of salary histories in recruiting and employment decisions.  NJ’s new Salary History law goes into effect on Jan 1, 2020.

The law makes it an unlawful employment practice for an employer to:

1. screen a job applicant based on the applicant’s salary history, including, but not limited to, the applicant’s prior wages, salaries or benefits; or  
2. require that the applicant’s salary history satisfy any minimum or maximum criteria.

Notwithstanding these prohibitions, the statute explicitly allows employers to:

1. consider salary history in determining salary, benefits, and other compensation for the applicant, and may verify the applicant’s salary history, if an applicant voluntarily, without employer prompting or coercion, provides the employer with salary history (although an applicant’s refusal to volunteer compensation information shall not be considered in any employment decisions); and
2. request that an applicant provide the employer with a written authorization to confirm salary history, including, but not limited  to, the applicant’s compensation and benefits, after an offer of employment that includes an explanation of the overall compensation package has been made to the applicant.

The law states that it does not apply to:

1. applications for internal transfer or promotion with an employee’s current employer, or use by the employer of previous knowledge obtained as a consequence of prior employment with the employer;
2. actions taken by an employer pursuant to any federal law or regulation that expressly requires the disclosure or verification of salary history for employment purposes, or requires knowledge of salary history to determine an employee’s compensation;  
3. any attempt by an employer to obtain, or verify a job applicant’s disclosure of, non-salary related information when conducting a background check on the job applicant, provided that, when requesting information for the background check, the employer shall specify that salary history information is not to be disclosed. If, notwithstanding that specification, salary history  information is disclosed, the employer shall not retain that information or consider it when determining the salary, benefits, or other compensation of the applicant; or
4. employer inquiries regarding an applicant’s previous experience with incentive and commission plans and the terms and conditions of the plans, provided that the employer shall not seek or require the applicant to report information about the amount of earnings of the applicant in connection with the plans, and that the employer shall not make any inquiry regarding the applicant’s previous experience with incentive and commission plans unless the  employment opening with the employer includes an incentive or commission component as part of the total compensation program.

Employers that violate New Jersey’s new law will be liable for a civil penalty of up to $1,000 for the first violation, $5,000 for the second violation, and $10,000 for each subsequent violation.

Seventeen other U.S. States and Territories have enacted laws restricting use of salary histories in employment: Alabama, California, Colorado, Connecticut, Delaware, Georgia, Hawaii, Illinois, Maine, Massachusetts, New York, North Carolina, Oregon, Pennsylvania, Puerto Rico, Vermont, and Washington.  Some of these laws only apply to certain employers (e.g., NC’s and PA’s laws only apply to state agencies).

Eighteen local jurisdictions have implemented restrictions on use of salary histories: (San Francisco, CA; Chicago, IL; Louisville, KY; New Orleans, LA; Montgomery County, MD; Jackson, MS;  Kansas City, MI; New York City, NY; Albany County, NY; Suffolk County, NY; Westchester County, NY; Cincinnati, OH; Toledo, OH; Philadelphia, PA; Pittsburgh, PA; Richmond County, SC; Salt Lake City, UT).  Some of these laws only apply to certain employers (e.g., Atlanta’s, Chicago’s, Louisville’s and New Orleans’ laws only apply to certain divisions of city government).

Two States have prohibited salary history bans within their jurisdictions:  Wisconsin and Michigan.

If you need assistance related to compliance with any of these laws, we can help.  Please direct questions to Amie Flowers Carmack.