Connecticut Soon to Join The Prior Salary Ban(dwagon)

by Orrick, Herrington & Sutcliffe LLP
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Connecticut Governor Dannel Malloy is poised to sign into law the Act Concerning Pay Equity bill, which has been passed by both the Connecticut House and Senate General Assembly.  In what Governor Malloy referred to as “commonsense legislation” to address pay equity concerns, the Connecticut bill would prohibit an employer, or a third party acting on the employer’s behalf (like a recruiting firm), from inquiring about a prospective employee’s wage and salary history unless voluntarily disclosed by the applicant.  The bill does permit an employer to inquire about other components that contributed to the applicant’s previous total compensation package, but not about the value of those items.  Although no examples are provided in the legislation, it would seemingly be permissible to ask whether a prospective employee received stock options at their previous employment, but not the value of those options.

Once signed by the Governor, the salary history ban would become effective January 1, 2019.  The bill would amend Title 31 of the Connecticut General Statutes, Labor Section 31-40z, which currently provides that employers cannot prohibit, among other things, employees from disclosing or discussing their wages with other employees.  The statute allows up to two years for an action to be brought in court and an employer found liable under the law could face compensatory and punitive damages, as well as attorney’s fees and costs.

Connecticut would be the fifth state (along with a host of cities) to enact a law banning an employer from asking prospective employees about their prior salary history.  See Orrick’s previous blog post on this issue.  Likewise, the Maryland legislature has been contemplating a similar bill.

Nevertheless, not every state and locality has embraced the salary history ban as a tool for addressing pay equity.  On March 26, 2018, Michigan Governor Rick Snyder signed a bill that prevents local governments from regulating the questions employers may ask of applicants during job interviews.  That law is set to take effect on June 24, 2018.  The Wisconsin legislature passed a similar law on March 29, 2018 which awaits Governor Scott Walker’s signature.  The Wisconsin bill prohibits, among other things, any city, village, town, or county (political subdivision) from enacting or enforcing an ordinance regarding an employer’s right to solicit information regarding the salary history of prospective employees.  In Philadelphia, the Chamber of Commerce successfully challenged that city’s salary history ban as a violation of the First Amendment.  Specifically, the court was unpersuaded that there was evidence that showed how prior wage history inquiries contributed to the wage gap, and the ban on asking about prior salary history was therefore unconstitutional.

Although the question of how many states and local governments will pass salary history ban legislation remains open, for now, it is clear that Connecticut employers will soon need to cease asking applicants about their prior compensation.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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