State and local bans on salary questions to job applicants are gaining momentum. Often citing wage gaps between men and women, several cities and states have enacted laws prohibiting employers from asking job applicants their current or historical salaries.
Proponents argue that greater pay equity results from employers making salary offers based on job requirements and market ranges, rather than past salaries. If an applicant’s current salary is under-market, salary question bans may correct pay inequities, or so the theory goes.
Regardless of whether these laws will have the intended impact, they are here to stay in numerous states and territories, including California, Delaware, Massachusetts, Oregon, and Puerto Rico. In addition, New York City and Philadelphia have passed comprehensive legislation, while New Orleans and Pittsburgh have enacted limited versions relating to city hiring.
What exactly is restricted? Although the specifics vary, the trend is to prevent employers from asking job applicants their prior salaries, preventing employers from requiring salary disclosure as a condition of employment, and prohibiting employers from retaliating against prospective hires if they fail to disclose such restricted information. Depending on the jurisdiction, obtaining express consent of the job applicant may permit a viable path for employers to obtain historical salary data.
Who should be concerned? Any employer who operates or recruits in these localities should consider whether it must comply. In addition, all employers should review the laws for where they operate or recruit. Employers who recruit nationally should consider whether to implement uniform policies and practices to comply across the enterprise.
Do employers risk liability if they fail to comply? The answer is a resounding yes. Although the legislation varies across jurisdiction, employers consistently face financial penalties. In addition, some have made access to the courts less rigorous, such as Massachusetts, which enlarged the time for job applicants to bring claims and eliminated any obligation to first exhaust administrative remedies.
On the other hand, some states have created an employer defense. Employers who conduct a preemptive pay analysis can minimize or eliminate damages or liability. Employers should consider whether to conduct initial or follow-up evaluations in connection with legal counsel in order to protect the review under the attorney-client privilege.
What other steps should employers take? Some things to consider are:
• Remove salary history questions from employment applications;
• Remove salary history questions from standard interview question forms;
• Train hiring managers and interviewers on the new restrictions;
• Review existing handbooks and written policies to ensure any reference to salary history is removed;
• Ensure third-party recruiting and onboarding vendors are also in compliance; and
• Ensure there are no policies preventing discussions about wages between employees.
Although a sea change is underway, employers should spend time now to determine if the organization will sink or swim. Depending on the number and location of employees and recruiting efforts, employers may need to make few or no changes. Multistate employers and recruiters, however, should consider whether crafting a uniform policy best protects them now and eases the need for future or one-off modifications as more localities enact similar legislation.
To obtain more information, please contact Catherine Strauss, Tami Earnhart or any member of the Ice Miller Labor, Employment, and Immigration Practice for further guidance.
This publication is intended for general information purposes only and does not and is not intended to constitute legal advice. The reader should consult with legal counsel to determine how laws or decisions discussed herein apply to the reader’s specific circumstances.