Please note that the information contained in this blog is being provided for informational purposes only and should not be construed as legal advice. Please consult your legal counsel to ensure compliance with all federal, state, and local laws.
Salary History Ban Laws
Beginning in 2016, many jurisdictions have passed pay equity laws that share the theme of prohibiting employers from seeking information related to a job applicant’s prior or current compensation history. These laws are commonly referred to as salary history ban laws. There are currently at least 17 states and 10 local jurisdictions that have passed salary history ban laws applicable to the private sector. Currently, there is no federal legislation that explicitly prohibits private employers from seeking information related to a job applicant’s prior or current compensation history. In the material to follow, we will explore the purpose of salary history ban laws and briefly summarize two recent laws’ prohibitions on seeking compensation history and some of their express exceptions.
What is the purpose of salary history bans, and why are they being implemented in some jurisdictions?
At their core, the purpose of salary history ban laws is to promote equal compensation among members of different protected classes for comparable work. Traditionally, employers have sought a job applicant’s prior or current compensation information to make compensation decisions for a particular position. Although this may seem harmless on its face, it can lead to a discriminatory result for women and minorities. By way of example, women have historically been paid less than men, and as such, if prior or current compensation information is used to make compensation decisions for a particular position, there is the possibility that the practice can perpetuate inappropriate wage inequalities. Accordingly, the implementation of salary history ban laws is a means to reduce the wage gap between members of different protected classes such those between women and men.
Are there any exceptions or limitations to the salary history ban laws?
Generally, salary history ban laws prohibit employers from seeking a job applicant’s prior or current compensation history. Still, as you will see below, the scope of each law varies based on the jurisdiction. For example, some laws’ inquiry prohibition only applies to inquiries directed at the job applicant or prior or current employers, while other laws go a step further and apply the prohibition to conducting a search of publicly available records or reports. Furthermore, the extent of the exceptions to a particular prohibition contrast from jurisdiction to jurisdiction. Some laws are silent and do not expressly cite any exceptions, while other laws list numerous situations in which inquiry into compensation history is permitted. Simply put, different jurisdictions use different methods to achieve the end goal of reducing the wage gap.
For illustrative purposes, let’s take a look at two of the more recent jurisdictions to have passed salary history ban laws applicable to the private sector. Please note that this information is not all inclusive. Instead, the summaries only primarily focus on language that prohibits investigation into compensation history and highlights select exceptions to those prohibitions. Indeed, the summaries do not completely emphasize, among other things, language within the laws in relation to relying on the compensation history information of a job applicant as a factor in determining compensation or a hiring decision. The summaries are simply meant to shed light on how the prohibitions against investigating compensation information impact the hiring process for employers. InCheck strongly recommends that readers work closely with their legal counsel to further examine all applicable salary history ban laws to ensure their hiring processes are compliant.
What salary history ban laws become effective in 2024?
At the state level, Minnesota is the latest to pass a salary history ban law. The law generally prohibits an employer, employment agency, or labor organization from inquiring into, considering, or requiring disclosure from any source the pay history of an applicant for employment for the purpose of determining wages, salary, earnings, benefits, or other compensation for that applicant. Still, the general prohibition against inquiring into the pay history of an applicant does not apply if the job applicant’s pay history is a matter of public record under federal or state law, unless the employer sought access to those public records with the intent of obtaining pay history of the applicant for the purpose of determining wages, salary, earnings, benefits, or other compensation for that applicant.
There are a couple other exceptions to the general prohibition. The law does not prevent the employer from inquiring about or otherwise engaging in discussions with an applicant about the applicant’s expectations or requests with respect to wages, salary, benefits, or other compensation. Similarly, the law does not prevent an applicant for employment from voluntarily sharing pay history with a prospective employer for the purposes of negotiating wages, salary, benefits, or other compensation. Importantly, though, the prospective employer cannot ask, encourage, or prompt the disclosing of pay history. The law went into effect on January 01, 2024.
At the local level, Columbus, Ohio is the most recent jurisdiction to pass a salary history ban ordinance. The ordinance generally prohibits employers from inquiring about the salary history of an applicant for employment. The ordinance makes it clear that inquiring about the salary history of an applicant for employment includes communicating any question or statement to an applicant, an applicant’s current or prior employers, or a current or former employee or agent of the applicant’s current or prior employers, in writing or otherwise, for the purpose of obtaining an applicant’s salary history. Moreover, inquiring about the salary history of an applicant for employment also includes conducting a search of publicly available records or reports for the purpose of obtaining an applicant’s salary history.
However, there are a few exceptions to the general prohibition. Notably, an employer may, without inquiring about salary history, engage in discussion with the applicant about their expectations with respect to salary, benefits, and other compensation, including but not limited to unvested equity or deferred compensation that an applicant would forfeit by resigning from their current employer. Additionally, the prohibition does not apply to the following: (1) any actions taken by an employer pursuant to any federal, state, or local law that specifically authorizes the reliance on salary history to determine an employee’s compensation; (2) a voluntary and unprompted disclosure of salary history information by an applicant; and (3) any attempt by an employer to verify an applicant’s disclosure of non-salary related information or conduct a background check, provided that if such verification or background check discloses the applicant’s salary history, such disclosure shall not be solely relied upon for purposes of determining the salary, benefits, or other compensation of such applicant during the hiring process, including the negotiation of a contract. The ordinance goes into effect on March 01, 2024.
What are the potential benefits and challenges associated with implementing salary history bans?
The overwhelming benefit associated with implementing salary history ban laws is the purpose behind the laws, as discussed above; The laws operate in a way to help eliminate potentially discriminatory wage gaps. Additionally, employers will benefit from avoiding the legal consequences that come with non-compliance of the laws.
Still, there are challenges associated with implementing salary history bans as employers should be taking steps to ensure compliance with applicable salary history ban laws. For example, employers should consult with their legal counsel to become familiar with applicable jurisdictions that contain a salary history ban law and understand all the prohibitions and exceptions under such law. Additionally, employers should review their job application materials to ensure applicants are not being asked to disclose their prior or current compensation information. Likewise, employers should train their hiring staff to ensure they do not ask applicants, orally or in writing, about their prior or current compensation unless they are permitted to do so under the applicable law. Notably, many employers are proactively taking these types of questions out of their job application materials and interview question lists to prevent any perception of discrimination.
How can InCheck help?
First and foremost, unless otherwise requested, InCheck will not include any compensation history within a background check report. Additionally, InCheck has created the guide, “Salary History Inquiries: Understanding the State and Local Prohibitions on Salary Inquiries,” which includes a survey of the salary history ban laws that are applicable to the private sector. InCheck will continue to monitor the evolving salary history ban laws and publish content if a new salary history ban law is on the horizon, which is very likely as the continued spread of salary history ban laws is expected.