Employers who routinely ask applicants about their salary history should be aware that in a growing number of jurisdictions that practice may be illegal. Last week, California became the fourth state to enact a law prohibiting private employers from asking for information about an applicant’s salary history. Delaware, Massachusetts, and Oregon currently have such laws that will become effective later this year or in coming years. In addition to state law prohibitions, localities including Puerto Rico, Philadelphia, San Francisco, and New York City have also enacted laws that will bar salary history inquiries.
California’s New Law
California’s new law, AB168, which will become effective January 1, 2018, applies to “all employers including state and local government employers and the Legislature.” The law prohibits employers from relying on “the salary history information of an applicant for employment as a factor in determining whether to offer employment to an applicant or what salary to offer an applicant.” Under the new law, an employer may not “orally or in writing, personally or through an agent, seek salary history information, including compensation and benefits, about an applicant for employment.” Additionally, the law requires an employer to provide, upon reasonable request, the pay scale for a position to an applicant.
The rationale for laws banning salary history information is that such information helps perpetuate wage inequality. Workers who may have been the victims of pay discrimination in the past will continue to suffer such discrimination if new salaries are set based on previous salaries rather than market factors. Women employees in particular have suffered from pay inequities; the U.S. Census Bureau data from 2016 indicates that women employees were paid only 80.5 cents for each dollar paid to male employees.
What Should Employers Do?
Employers who recruit and hire in the jurisdictions that ban inquiries about salary history should eliminate all questions relating to salary history on applications and any related hiring forms such as new hire packages. Employers who have multi-state work forces may want to be consistent and eliminate such inquiries from all applications and hiring related forms used in all jurisdictions. All employees involved in recruiting and hiring should be trained not to ask about salary history. Employers should also audit their compensation practices to ensure pay equity exists not only between men and women but also across all protected classes.