New Salary History Ban – the Latest Trend in Employment Law

Derek Jones

Derek Jones

VP of Business Development, Deputy Americas

August 14, 2018

New Salary History Ban – the Latest Trend in Employment Law

Derek Jones, VP of Business Development, Deputy Americas
August 14, 2018


 


What is a salary history?

A salary history is a document that has details of the earnings an employee has received in the past. A salary history normally includes the name of every company a job candidate has worked for, their job title, and benefits package. It was common practice for employers to ask job candidates about their salary history. Some employers required salary histories to be provided at the time of the job application and others asked for this information during the interview process.


Salary history ban

Employers have requested salary histories to assist in the recruitment process. Salary histories inform the decision-making process of whether employers are able to afford a job candidate. However, there have been a growing number of states and cities that have imposed a salary history ban on employers. Salary history ban legislation has been enacted to help tackle the wage inequality amongst men and women. Disparities between men and women’s pay vary by state. For example, Louisiana has the biggest pay gap (30%) in the U.S. On average, women earn 80.5 cents for every dollar earned by men.

New Salary History Ban - The Latest Trend in Employement Law-chart

Different jurisdictions have unique ways of tackling the gender pay gap with the salary history ban. Some laws are very specific in their wording, while others could be open to interpretation because of broad wording. Although salary history ban laws prohibit employers from asking job candidates about their past and existing pay or using information about past wages to make hiring decisions, the details differ by state and city.

What most of the salary history ban laws have in common is that they don’t prevent a job candidate from voluntarily divulging their current or past pay. This is known as a ‘safe harbor’ provision. Salary history ban laws do vary in relation to what an employer can do when a candidate offers information about their previous or current pay. For instance, Massachusetts seems to allow employers to consider voluntary pay information to confirm the candidate’s salary history but not for setting pay.

Employers should tread carefully when exercising safe harbor provisions. Given that breaking salary history ban laws will result in penalties, fines, and punitive damages, it’s recommended that employers should be very careful to comply with the relevant laws. It may be difficult to prove that a job applicant voluntarily divulged their salary. An applicant can make a complaint that your company discussed their salary history and this is prohibited. The burden of proof may be on you to show that this information was offered without a request being made. The candidate could argue that they felt obliged to talk about their salary history when discussing pay and benefits during the interview. You may need to provide evidence to show that you did not ask for a job applicant’s salary history.


Salary history and requirements

There is a difference between salary history and salary requirements. A job candidate’s salary requirement is the pay they expect to receive for the job they’re applying for. When asking “is it legal to ask for salary history?” the answer is, it depends on whether your city or state has legislation involving this area. However, salary requirements are different because employers need to know what salary the job candidate is expecting for them to accept the job offer. Salary requirements provide the basis of negotiations between you and the job candidate.

Where your business operates in a jurisdiction that does not have salary ban laws, it is good practice to start preparing to remove salary history questions from your hiring process. This HR trend appears to be growing and it may only be a matter of time before your company is affected. Start by assessing your hiring policies and train your employees about what’s acceptable during the recruitment process. You may also want to consider removing questions about salary history from your application form and interview questions.


Is it legal to ask for salary history?

The answer to this question depends on the states or cities that your company is based in. The states and cities below have some form of salary history ban law or are planning to enact this law in the near future. Therefore, you should take immediate steps to comply with this legislation if you have not already done so.

  • Albany County – Albany County bans employers from asking details about previous pay and benefits until after the candidate is offered a job. This law came into effect on December 17, 2017.
  • California – This law took effect in January 2018 and prohibits public and private employers from making enquiries about a job applicant’s pay history. Employers cannot use pay history to determine pay, even if applicants have volunteered this information.
  • Connecticut – Employers in Connecticut cannot ask about a job candidate’s pay history unless the candidate voluntarily divulges this information. This law becomes effective on January 1, 2019.
  • Delaware – In December 2017, Delaware stopped all employers from asking job applicants about their salary history. Employers cannot screen job candidates on the basis of what they have been paid in the past. But employers can verify this information after they have extended an offer to the candidate.
  • Hawaii – Employers are banned from asking about salary histories and they are not allowed to rely on this information unless the job candidate volunteers it. This law does not relate to internal applicants and will come into effect on January 1, 2019.
  • Kentucky – This salary history ban law came into effect on May 17, 2018, and states that city agencies cannot ask candidates for their salary histories.
  • Massachusetts – Massachusetts’s salary history ban law came into effect on July 1, 2018. Employers are banned from asking for salary information. However, they can substantiate prior history if these details are volunteered by the job candidate, or, if a job offer has been made.
  • New Jersey – An executive order has been signed banning New Jersey’s agencies and offices from asking candidates about their pay history or making investigations into their compensation history. This executive order has been in effective from Feb. 1, 2018.
  • New Orleans – The Mayor of New Orleans has signed an executive order prohibiting all city departments and employees of contractors from asking salary history questions. This rule has been effective since January 25, 2017.
  • New York – This salary history ban law came into effect on January 9, 2017, and declares that state agencies and departments cannot ask for salary histories from job candidates until after an employment offer is made. Where the employer already knows details about the job candidate’s previous pay, this information cannot be used to work out the job candidate’s compensation, unless this is a legal or collective bargaining requirement.
  • New York City – This salary history ban law has stopped private and public employers making enquiries about a job applicant’s previous pay or benefits. If an employer already knows the details of the job applicant’s previous compensation package, it is illegal to use this information to determine pay. The New York City salary history ban law has been effective since October 31, 2017.
  • Oregon – Employers are banned from asking candidates about their salary history until after an offer of employment is made. Additionally, employers are not allowed to use their knowledge about a job candidate’s previous compensation package to determine pay. The exception to this rule is where current employees are changing positions with the same employer. This law has been effective from October 6, 2017.
  • Pennsylvania – A federal judge ruled on April 20, 2018, that employers in Philadelphia can ask candidates to disclose their job history. However, employers cannot use this information to set pay.
  • Pittsburgh – It is illegal for Pittsburgh’s agencies and offices to ask about a job candidate’s previous compensation. If this information is discovered, employers are banned from taking these details into consideration, except where a candidate has voluntarily provided it. This law has been effective from January 30, 2017.
  • Puerto Rico – It is illegal for employers in Puerto Rico to ask for a candidate’s salary history. However, there are exceptions, where job candidates voluntarily disclose their salary history and confirmation of the previous salary is made after an offer of employment has been extended. Puerto Rico’s salary history ban came into effect on March 8, 2017.
  • San Francisco – Employers are banned from asking about salary histories and from taking into consideration a job candidate’s existing or previous pay when determining the compensation package. Employers are also prohibited from divulging details of former or current employees pay without their permission. This salary ban law became effective on July 1, 2018.
  • Vermont – This salary history ban law stops employers from asking about a job candidate’s previous compensation. If these details are volunteered by the job candidate, the employer can only confirm it after the candidate is offered the job. This law took effect on July 1, 2018.
  • Westchester County – This salary history ban law states that employers cannot ask about pay history. However, there are a few instances where employers can verify previous compensation and consider this information when determining pay. This salary history ban law came into effect on July 9, 2018.

Despite the growing number of salary history ban laws, there are some jurisdictions that are bucking this trend. Michigan and Wisconsin have effectively banned salary history bans and have stated that employers are within their rights to ask job candidates about their pay history.


Salary history template

If your company is unaffected by salary history ban laws and you want to continue to ask about a job candidate’s previous compensation, consider using a salary history template. You can create your own salary history template or download one that suits your company. Your salary history template can be in different formats and should request the following information:

  • Starting salary.
  • Ending salary.
  • List of annual salaries for a specified number of companies.

Salary negotiation email

Whether or not your business is under the jurisdiction of a salary history ban law, it is likely that your job candidate will want to negotiate their pay if offered the job. It is not unusual for salary negotiations to start off via email and end with a conversation.

It is likely that the first salary negotiation email you will receive is a counter-offer. Your candidate will make their case to provide reasons why you should consider their counter-offer. Providing a reasoned basis for a counter-offer reminds you of the candidate’s value. After the candidate explains the reasons why they believe they deserve a higher salary, they will include a figure which reflects their experience and what they can bring to your team. Salary negotiation by email is useful for you and the candidate as it gives you both the time to consider your position.


Stay Compliant

Salary history ban laws appear to be an employment law trend that is set to continue. Despite the few jurisdictions that are against salary history ban laws, it is safe to assume that your company may be affected by previous pay legislation at some point in the future. Compliance with employment law can make the difference between business success and failure. Contact us below for a demo of Deputy’s solution to help your business to comply with a number of laws, including the predictive scheduling legislations.

Important Notice
The information contained in this article is general in nature and you should consider whether the information is appropriate to your needs. Legal and other matters referred to in this article are of a general nature only and are based on Deputy's interpretation of laws existing at the time and should not be relied on in place of professional advice. Deputy is not responsible for the content of any site owned by a third party that may be linked to this article and no warranty is made by us concerning the suitability, accuracy or timeliness of the content of any site that may be linked to this article. Deputy disclaims all liability (except for any liability which by law cannot be excluded) for any error, inaccuracy, or omission from the information contained in this article and any loss or damage suffered by any person directly or indirectly through relying on this information.


SHARE THIS POST
comments powered by Disqus
ABOUT THE AUTHOR
Derek Jones
Derek is the VP of Business Development in North America and has 16+ years’ experience in delivering data-driven sales and marketing strategies to SaaS companies.
More than 165,000 workplaces have used Deputy. Subscribe to learn why.
TRENDING ARTICLES

Never miss a beat!

More than 165,000 workplaces have used Deputy. Subscribe to learn why.