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As more states and municipalities increasingly adopt laws and regulations that restrict employers from requesting current pay rates and salary history from job applicants, businesses should ensure that their hiring practices are up to date.
Fifteen states, Puerto Rico and a number of localities now restrict employers from requesting salary history information from job applicants during the interview process. Some of these restrictions also prohibit an employer from relying on an applicant’s pay history to set compensation if discovered or volunteered. Another example of this trend is that other restrictions prohibit an employer from taking disciplinary action against employees who discuss pay with co-workers, according to HRDive, which tracks states and localities that have banned pay history questions.
States that have restricted salary history inquiries by employers include California, Connecticut, Delaware, Hawaii (effective Jan. 1, 2019), Illinois, Kentucky, Louisiana, Massachusetts, Michigan, New Jersey, New York, Oregon, Pennsylvania (effective date to be determined), Vermont and Wisconsin, according to HRDive. Local bans are in effect in San Francisco, Chicago, Louisville, New Orleans, New York City, and Albany and Westchester counties in New York State.
Several large corporations, including Amazon.com Inc., Bank of America Corp., Google and Facebook have also committed to cease asking job applicants for their salary history.
Fines for violations vary, from $10,000 per violation in Delaware to penalties of up to $250,000 for infractions in New York City.
In areas where inquiry into job seekers’ salary history is restricted, employers should stay up do date on current employment laws and adjust their hiring practices, removing any questions regarding salary history from job applications. Human resources and recruiting personnel should be trained to ensure that they do not ask questions about an applicant’s salary history during the application and interview process and any staff involved in the hiring process needs to know how to avoid potential liability if salary history is involuntarily disclosed or requested during an interview.
Businesses that do not operate in the states or municipalities affected by the new laws should nonetheless stay up to date on legal developments or proposals of this type, as this progressive trend toward improving fairness in the workplace may soon reach their area(s)
Businesses “have a great deal to gain by implementing a strategy and process aimed at improving the overall fairness and transparency of their reward and talent management programs,” said Bob Wesselkamper, Global Head of Rewards and Benefits Solutions, Korn Ferry Hay Group, in response to a recent survey on salary history questions conducted by his company. “This can help organizations create an employee value proposition that positions the company as a place where everyone can build careers and thrive.”
Some proponents of restricting salary history requests say that basing pay on past wages perpetuates the earnings divide between sexes—mostly negatively impacting women—and prohibiting it could help to curb salary disparity between men and women. Pay disparity is often perpetuated by the practice of basing compensation on an applicant’s previous salaries, which may have been negatively impacted by their minority status.
Women make 82 percent of what men earn, according to a Pew Research Center analysis of median hourly pay in 2017. Although the gender pay gap has narrowed since 1980, it has remained relatively stable over the past 15 years.
“Even though women have increased their presence in higher-paying jobs traditionally dominated by men, such as professional and managerial positions, women as a whole continue to be overrepresented in lower-paying occupations,” according to the Pew Research Center’s analysis, and “[t]his may also contribute to gender differences in pay.”
Whether the change improves gender pay equity remains to be seen. The survey by the Hay Group division of Korn Ferry indicated that 65 percent of executives believe that the law will not, or only to a small extent, actually improve the gender pay equity situation in their organization. Yet nearly half of the executives polled (46 percent) said choosing to comply with the most stringent legislation is the likely mode of adapting to the new legislation, as opposed to complying to each local legislation, according to the same survey.
Whether this change stems the decades of wage disparity or not, for many crucial business locations, the restriction on inquiries is here, and businesses would be wise to adapt or face enforcement and fines.
Employers should contact a labor and employment attorney for clarification of salary history restrictions in their state.
Erick Kraemer, Esq. is an Associate in Tully Rinckey PLLC’s Buffalo office where he practices Employment Law, Federal Employment Law, Business Law and Criminal Law.