Alert December 11, 2017

Update on State and Local Bans on Salary History Inquiries

Summary

A number of jurisdictions have recently passed laws prohibiting employers from inquiring into the salary history of job applicants, sometimes as a part of broader pay equity laws. New York City’s salary inquiry ban is in full effect as of October 31, 2017. Oregon’s and Puerto Rico’s salary inquiry bans are also currently in effect, even though some other provisions of those laws have not taken effect.  Several other jurisdictions have salary inquiry bans becoming effective soon: Delaware (December 14, 2017), California (January 1, 2018), Massachusetts (July 1, 2018) and San Francisco (July 1, 2018). Philadelphia’s salary inquiry ban is currently stayed pending resolution of a constitutional challenge raised in federal court by the Chamber of Commerce of Greater Philadelphia. Depending on the outcome, similar challenges may be raised elsewhere.

We previously issued client alerts on the salary history bans in Massachusetts, New York City, and California/San Francisco. While each jurisdiction’s law prohibiting salary inquiries varies and has its own scope and nuances, there are some commonalities across these laws. Below is a summary, including a comparative chart, of some of the basic provisions and exceptions.

Prohibited Inquiries Into Salary History

Generally, these laws prohibit employers from asking applicants or their current or former employers about the applicants’ current or former salary and other compensation, typically broadly encompassing all components of compensation, including salary, incentive compensation, benefits and equity. Agents of employers are specifically subject to the same prohibitions under the laws of California, Delaware, Puerto Rico and San Francisco, and employment agencies are specifically subject to the same prohibitions under the laws of New York City, Philadelphia and San Francisco. New York City specifically prohibits any search of publicly available records or reports for the purpose of obtaining compensation history, as well as any inquiries made to a current or former employee or agent of an applicant’s current or former employer. California and San Francisco broadly prohibit inquiries directed to any potential source of information.

Prohibited Use of Salary History

Many jurisdictions prohibit the use of salary and other compensation history in determining an applicant’s compensation, but such use is permitted if an applicant voluntarily discloses the information. The one exception is Oregon, which does not permit employers to use voluntarily disclosed salary history. New York City and San Francisco also specifically provide that if an employer learns salary history information, even if inadvertently through a background check, it may not use such information. Delaware, Massachusetts and Oregon specifically prohibit employers from using salary history to “screen” applicants by requiring that their prior salary meet certain criteria, such as certain minimum or maximum levels.

Permitted Inquiries and Use

Employers may ask employees about their expectations for salary and other compensation. Employers may also discuss the proposed salary or salary range for the position or other proposed compensation terms. Some jurisdictions specifically note that employers may inquire about and discuss objective measures of productivity, such as sales or revenue generated by the applicant at his or her current or former jobs, or the value of deferred or unvested compensation that the applicant would forego upon resignation. Massachusetts, Oregon and Puerto Rico also expressly permit employers to ask about and verify an applicant’s salary history after the salary has been negotiated and a job offer has been made. Delaware and New York City permit later inquiries as well, but only after the offer has been accepted or the employee has been hired. Finally, many of these laws specifically permit employers to consider a current employee’s salary where the employee seeks a new position with the same employer, or where otherwise required or authorized under federal, state or local law. The fact that certain inquiries are specifically permitted in some jurisdictions does not mean that they are prohibited in other jurisdictions. By the same token, the fact that certain uses of salary history information are specifically prohibited in some jurisdictions does not mean that they are permitted in other jurisdictions.

California-Specific Disclosure

In addition to prohibiting salary history inquiries, California also requires employers, upon request, to disclose the pay scale of the position for which the applicant is applying. 

Summary of Key Provisions

Following is a chart comparing some key features of these laws. In all cases, employers are barred from asking applicants about their compensation histories, and in almost all cases, employers are prohibited from seeking the same information from an applicant’s current or former employer. Differences arise in circumstances when information is voluntarily disclosed by the applicant without any inquiry and when an employer learns information without having made a prohibited inquiry.


Prohibited Uses if Learned Inadvertently (Without Prohibited Inquiry or Voluntary Disclosure)

Jurisdiction
(Effective Date)
Scope of Prohibited Compensation
History Inquiries
Permissibility of Use if
Voluntarily Disclosed
Prohibited Uses if Learned Inadvertently
(Without Prohibited Inquiry or Voluntary Disclosure)
California
(1/1/18)
  • Any inquiries
Permissible
  • Setting salary
  • Hiring decision
Delaware
(12/14/17)
  • Applicant
  • Current/former employer
Permissible
  • Screening
Massachusetts
(7/1/18)
  • Applicant
  • Current/former employer
Permissible
  • Screening
New York City
(10/31/17)
  • Applicant
  • Current/former employer
  • Current/former employee or agent of current/former employer
  • Public records search
Permissible
  • Setting Salary
Oregon
(currently effective; other gender equity provisions effective 1/1/19)
  • Applicant
  • Current/former employer
Prohibited
  • Setting salary
  • Screening
Philadelphia
(stayed)
  • Applicant
Permissible
  • Setting salary
Puerto Rico
(currently effective; enforcement effective 3/8/18)
  • Applicant
  • Current/former employer
Permissible
  • N/A
San Francisco 1
(7/1/18)
  • Any inquiries
Permissible
  • Setting salary
  • Hiring decision

[1] Employers in San Francisco must comply with the requirements of both the San Francisco and California laws.

Considerations for Employers

Employers operating in jurisdictions affected by these laws should consider taking several steps:

  • Train hiring managers and interviewers to make sure applicants are not asked about their current or prior salary but rather their salary expectations and the anticipated salary of the position. 
  • Make sure that the only circumstance in which salary history is used in making compensation or other employment decisions is if the salary history has been clearly voluntarily disclosed at the applicant’s initiative (and in Oregon the salary history may not be used even then).
  • Direct recruiters to comply with applicable laws, including laws to which the employer is subject.  Review contracts with recruiters to ensure that they are solely responsible for their own violations.
  • Review job application forms to ensure that salary or other compensation history information is not requested.
  • When conducting background checks through reporting agencies, request that any compensation history information be excluded from the report where prohibited.
  • Obtain written authorization before providing a reference for a former employee, especially in connection with any request for compensation information.

As noted above, the law of each jurisdiction has its own contours and nuances, and employers should ensure that they are in compliance with the specific requirements of the applicable jurisdiction.

If you have any questions or need assistance implementing compliance with the laws prohibiting compensation history inquiries, please contact a Goodwin employment law specialist.