Will the Controversial Salary History Ban Extend Nationwide?

NYC Latest to Adopt Salary History Ban

New York City recently became the latest to prohibit employers from asking job applicants for their salary history during the job interview or salary negotiation process.  

Trend to Ban Salary History Inquiries

Last year, Massachusetts became the first state in the country to ban employers and recruiters from asking job candidates about their wage history. Other states and municipalities have quickly followed suit. Last month, the New York City Council passed a regulation making it an unlawful discriminatory employment practice to inquire about the salary history of a job applicant, or rely on an applicant’s salary history when setting compensation during the hiring process.

New York State is currently considering similar legislation. Assembly Bill 5982 would make it an unlawful discriminatory practice for any employer, labor organization, employment agency or licensing agency to seek salary history from a prospective employee for an interview or as a condition of employment. The bill is currently in committee.

A New Jersey bill would amend the Law Against Discrimination (LAD) to include similar prohibitions. Under Assembly Bill No. 3480, employers would be prohibited from inquiring about the salary history of a job applicant, including the prospective candidate’s compensation and benefits.

On the federal level, lawmakers recently reintroduced the Paycheck Fairness Act. It would prohibit employers from screening job applicants based on their salary history or requiring salary history during the interview and hiring process. It would also require employers to prove that pay disparities exist for legitimate, job-related reasons and protect against retaliation for discussing salaries with colleagues.

Do Bans Close the Gender Pay Gap?

The rationale behind the bans is that an unfair wage can continue to haunt workers when it is used to set the salary for a new position. In practice, women and minorities are often impacted most by pay discrimination. Accordingly, the restriction on asking about salary history is intended to improve pay equality by forcing employers to determine compensation based solely on merit.

Critics of wage history bans contend that the laws don’t actually help close the gender pay gap, but are merely window dressing that will more pointedly make hiring harder. They further maintain that companies are already taking steps to address pay equality and that additional wage laws only create regulatory burdens.

The Greater Philadelphia Chamber of Commerce recently filed a lawsuit challenging the city’s salary history ban. It argues that the law violates employers’ First Amendment rights. “The ordinance is a broad impediment to businesses seeking to grow their workforce in the city of Philadelphia,” the chamber said in a statement.

For businesses that operate in several jurisdictions, it is important to stay on top of legal developments in this area. According to the National Women’s Law Center, 20 states, the District of Columbia, and two cities have introduced legislation that seeks to restrict inquiries into salary history information.

If your company is already subject to wage inquiry regulations, it is imperative to verify that all human resources personnel and hiring managers understand the new restrictions. Employers should also verify that any job applications do not request applicants to provide their salary history.

Do you have any questions regarding the salary history ban and how it may affect your New York business? Would you like to discuss the matter further? If so, please contact me, Sean Dias, at 201-806-3364.