Salary History Ban Spreads—New Jersey and New York Jump on Board!

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New Jersey and New York are the latest states to prohibit employers from asking job applicants about their pay history and considering pay information in making employment decisions.

New Jersey

In New Jersey, effective January 1, 2020, private employers cannot screen applicants based on their pay history. Employers also cannot require an applicant’s salary history satisfy a certain minimum or maximum criteria. Employers may not consider an applicant’s refusal to provide compensation information in making an employment decision.

There are several noteworthy exceptions and limitations to this law. Employers may:

      1. Consider salary history in determining benefits and compensation for an applicant, and also verify salary history, if the applicant voluntarily, without being prompted or coerced by the employer, discloses the applicant’s salary history; and
      2. After extending an offer of employment with an explanation of the offeree’s overall compensation, ask the offeree for a written authorization so that the employer may confirm compensation and benefits.

The salary inquiry prohibition also does not apply in the following situations:

      1. Applications for internal transfers or promotions;
      2. Where a federal law or regulation expressly requires the disclosure of salary history for employment purposes;
      3. Attempts by employers to obtain or verify non-salary-related information through a background check on the job applicant. However, employers must still specify when requesting a background check that salary history information should not be disclosed on the report. If such information is nevertheless disclosed on the report, then the employer cannot retain the information or consider it in determining the applicant’s compensation;
      4. Employer inquiries about an applicant’s prior experience with, and terms and conditions of, incentive and commission plans—so long as an incentive or commission plan is part of the prospective compensation program and the employer does not ask about prior earnings under prior plans;
      5. Where an applicant provides salary history information to an employment agency contacted by the applicant—so long as the employment agency does not share that information with potential employer without the applicant’s express prior written consent.

Employers who violate the law are liable for civil penalties of up to $1,000 for the first offense; $5,000 for the second offense; and $10,000 for subsequent violations.

New York

In New York State, effective January 6, 2020, both public and private employers are prohibited from seeking or requiring an applicant or current employee, or any other third party, to disclose an applicant’s wage history as a condition of being interviewed or considered for a job, for continued employment, or for a promotion. Employers also may not use an applicant’s wage history in deciding whether to extend an offer of employment or in determining an individual’s wages.

Employers may, however, obtain information about an employee or applicant’s wages in the following circumstances:

      1. When the applicant or employee voluntarily, and without prompting, discloses or verifies salary history;
      2. When the employer is seeking to confirm wage history—so long as the information is being sought after an employment offer has been made, and the offeree is seeking to negotiate wages that are higher than what the employer previously offered;
      3. When verification of salary history information is required by any federal, state, or local law.

Employers who violate this law may be subject to a civil action for compensation for any damages sustained as a result of such violation, as well as injunctive relief and attorneys’ fees.

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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