Update regarding laws surrounding salary inquiry

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Jurisdictions Impacted by Salary Restrictions
  • This is a reminder that Oregon and New York City’s Salary History Restrictions go into effect October 2017. Delaware goes into effect November 2017, where as San Francisco and Massachusetts don’t take effect until July 2018. Philadelphia is still on hold.
    • Employers need to be mindful of this now ever more popular trend in legislation, because the main concern is that employers are making hiring decisions over a candidate’s current or past salary. The following cities and states have enacted laws restricting the use of salary histories of applicants and employees.
  • Delaware
    • What to look out for?
      • Delaware’s Governor signed House Bill 1 on June 14, 2017 that will go into effect December 2017.
        • This law prohibits employers from screening potential candidates based on their compensation histories, including by requiring that an applicant’s prior compensation meet a minimum or maximum criteria or seek the potential candidates’ s compensation history of an applicant from the potential candidate or current or former employer.
      • Delaware, however, does not prohibit employers from setting compensation based on prior salary history if the candidate voluntarily discloses their prior compensation history.
      • Employers may also further request and obtain compensation history, but only after an offer of employment with terms of compensation has been extended and for the sole purpose of confirming the job applicant’s compensation history.
      • Delaware Department of Labor (DDOL) is the governing body who has the right to enforce and impose civil penalties for any violations of this new law. An employer who violates this law is subject to a penalty of no less than $1,000, but no more than $5,000 for the first offense and no less than $5,000, but no more than $10,000 for each subsequent violation.
      • Summary: The law applies to both current and former employers.
      • Take away: Employers cannot screen candidates on their past salary history, however an employer can if a candidate voluntarily discloses their past salary history. Also, an employer can request or obtain salary history if the employer’s sole purpose is to confirm the past salary history and a conditional offer of employment is extended to the candidate.
      • Link to House Bill 1 is here.
  • Massachusetts
    • What to look out for?
      • On August 1, 2016, the legislature of the Commonwealth of Massachusetts enacted the 2016 Chapter 177, which will go into effect on July 1, 2018.
      • This bill formally prohibits discrimination in 2016 Chapter 177 now making it a discriminatory employment practice for an employer to:
        • Seek the wage or salary history of a prospective employee from the prospective employee or a current or former employer or to require that a prospective employee’s prior wage or salary history meet certain criteria; provided, however, that:
          • If a prospective employee has voluntarily disclosed such information, a prospective employer may confirm prior wages or salary or permit a prospective employee to confirm prior wages or salary; and
          • A prospective employer may seek or confirm a prospective employee’s wage or salary history after an offer of employment with compensation has been negotiated and made to the prospective employee;
      • Summary: The law applies to both current and former employers.
      • Take away: do not inquire about salary unless a prospective employee has voluntarily disclosed the information or after an offer of employment with compensation has been presented and agreed upon by the prospective employee.
      • Link to 2016 Chapter 177 is  here.
  • New York City
    • What to look out for?
      • New York City Council passed legislation to enact the New York Salary History restriction (Introduction 1253-2016) which will go into effect October 2017.
      • This bill formally amends the New York City Human Rights Law, Title 8 of the Administrative Code of the City of New York, which prohibits discrimination in New York City. 1253-A now makes it a discriminatory employment practice for an employer to:
        • Inquire about the salary history of an applicant for employment, which includes either asking the applicant directly about his or her salary history or conducting a search of publicly available records or reports; or
        • Rely on the salary history of an applicant in determining that applicant’s salary at any stage in the employment process, unless the applicant “unprompted” and “willingly” discloses his or her prior salary information.
      • The law applies to all employers, both public and private. This law is slated as a way to eliminate the “pay gap,” arguing that an employer’s use of an applicant’s previous salary history could lead to gender-based wage discrimination under the theory that applicants would be paid based on their past earnings, rather than what they would be offered if judged on a blank slate. The law does not apply to current employees being transferred or promoted by the employer. The salary history does include such things as a company car, expense accounts, club memberships and alike.
      • Summary: This law applies to both current and former employers.
      • Take away: do not inquire about salary or rely on the salary history to determine applicant’s salary unless a prospective employee has voluntarily disclosed the information.
      • Link to bill is here.
  • Oregon
    • What to look out for?
      • Oregon’s Governor signed Oregon Equal Pay Act of 2017 (House Bill 2005) on June 1, 2017 which prohibits employers from screening job applicants or determine compensation for a position based on current or past compensation.  In addition, employers are prohibited from seeking this information from the current or former employer of the applicant, however the law is not intended to prevent an employer from confirming prior compensation after the employer makes an offer of employment and prior employee authorization is obtained.
        • House Bill 2005 will take effect October 9, 2017.
        • An employer cannot discriminate against a protected class member in pay wages or other compensation unless the differences are
          • Based on a bona fide factor
          • Related to the position in question and
          • Based on one of the following factors
            • A seniority system
            • A merit system
            • A system that measures earnings by quantity or quality of production
            • Workplace location
            • Travel, if travel is necessary and regular for the employee
            • Education
            • Training
            • Experience or
            • Any combination of the above factors.
      • Summary: This law applies to both current and former employers.
      • Take away: An employer who makes a conditional offer of employment and obtains the candidate’s consent can obtain a candidate’s past or current salary history for the sole purpose of confirming the salary. Employer cannot disqualify an applicant or limit compensation because of past or current salary.
      • Link to House Bill 2005 is here.
  • Philadelphia
    • What to look out for?
      • Due to a lawsuit filed by the Chamber of Commerce for Greater Philadelphia, The City of Philadelphia has agreed to stay the enforcement of the Philadelphia Wage Equity Ordinance, which was to take effect on May 23, 2017, and be codified in the Philadelphia Code at Sections 9-1103((1)(i) and 9-1131.
      • The suit alleges that while the Chamber supports the goal of eliminating gender-based wage discrimination, the Ordinance fails to advance that goal.  Instead, the Chamber feels the Ordinance takes an ineffective, roundabout and over-inclusive approach that:
        • Violates the First Amendment by chilling protected speech of employers and impairing their ability to make informed hiring decisions,
        • Violates the Due Process clause by imposing severe penalties for violation of vague provisions, e.g. “knowing and willing disclosure” and a definition of “employer” that would apply beyond the City limits and Pennsylvania borders,
        • Violates the Commerce Clause by having extraterritorial effect that burdens interstate commerce, and
        • Violates the Pennsylvania Constitution and Home Rule Act by regulating individuals who neither live nor work in the City of Philadelphia.  Based on this agreement, the Court issued an Order staying the enforcement of the Ordinance.
      • The Court will first consider the City’s forthcoming motion contesting the Chamber’s standing to bring the case, which will be fully briefed by May 12, 2017.
      • Summary: This law applies to both current and former employers.
      • Take away: Until the lawsuit gets settled, the Philadelphia law will not take into effect.
      • Link to bill is here.
  • San Francisco
    • What to look out for?
      • On July 19, 2017, San Francisco Mayer Ed Lee signed the Parity in Pay Ordinance (Article 33J), which prohibits employers from:
        • Inquiring about an applicant’s salary history.
        • Considering an applicant’s salary history as a factor in determining what salary to offer an applicant.
        • Refusing to hire, or otherwise disfavor, injure or retaliate against an applicant for not disclosing their current or previous salary history to the employer.
        • Releasing the salary history of any current or former employee to the applicant’s employer or prospective employer without written authorization from the current or former employee.
      • Nothing in this ordinance prohibits an applicant from voluntarily disclosing salary history following an employer’s initial salary offer in order to negotiate a different salary or prohibit an Employer from considering that applicant’s salary history in determining a counter-offer.
      • San Francisco’s Office of Labor Standards Enforcement (OLSE) has the discretion on how to determine penalties.
        • First violation which occurs at any time or for any violation occurring during the first 12 months, OLSE must issue a warning and notice to correct.
        • Any subsequent violation after the 12 month period, OLSE may impose an administrative penalty of no more than $100 that the Employer must pay to the City for each employee or applicant as to whom the violation occurred.
        • Any subsequent violations within the 12 month period, the penalty may increase to no more than $200 for the second violation and no more than $500 for each additional violation.
      • Summary: This law applies to both current and former employers.
      • Take away: do not consider or inquire about a candidate’s past or current salary history and prohibited from disclosing the candidate’s salary history without the candidate’s authorization.
      • Link to Article 33J is here.
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About the Author:

John McBride, SPHR, SHRM-SCP is the Director of National Recruiting with Consentium Search, a woman-owned National Executive and Management Search Firm based out of Short Hills, NJ specializing in recruiting Safety, Environmental, Occupational Health, Risk, Human Resources and Case Management professionals. John is a self-described ‘recovering corporate executive’ having spent in excess of twenty years in roles such as Director of Human Resources and Director of Risk Management including oversight of the Safety function for 55,000 employees, He is certified as a Senior Professional in Human Resources (SPHR) and Society for Human Resource Management Senior Certified Professional (SHRM-SCP). He is an active member of the American Society of Safety Engineers (ASSE), the National Safety Council (NSC) and Society for Human Resource Management (SHRM). John has spoken both locally and nationally for ASSE, NSC, SHRM; the US Army’s “Tip of the Arrow” Ultimate Warrior Demobilization Program to ready our forces for the return to civilian jobs; and the Risk and Insurance Management Society (RIMS) on Career Development, Networking and Employee Productivity. He also volunteers with the American Diabetes Association, Habitat for Humanity and is Past President of the Society of Human Resource Management of Central New Jersey.
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