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Salary History – What’s That? Where We’ve Been in 2019; Where We’re Going in 2020

By: Christine Cunneen

The legislative trend banning salary history questions is clearly not going anywhere. In fact, it is quite the opposite. At times, it seems nearly as if it’s an epidemic spreading throughout the country. Through the passage of various state and local laws, an employer’s ability to inquire about a job applicant’s salary history is diminishing at an increasing rate.

The trend itself is not new, the pace; however, is.  Starting over three years ago, with Massachusetts and Philadelphia, salary history bans never impacted as many states as they did in 2019. Today, 14 states (and Puerto Rico) and 8 localities have passed salary history bans for private employers, with an astounding 50% of those passed in 2019 alone.  In addition to bans on private employers, 3 states and 10 localities have passed similar legislation for public employers.

Some of the laws passed in 2019 are already in effect, including Alabama, Illinois, Maine, Kansas City (MO), Suffolk County (NY), and Washington.   However, some are not effective until 2020 or later:

  • New Jersey – January 2020
  • New York – January 2020
  • Cincinnati (OH) – March 2020
  • Toledo (OH) – June 2020
  • Colorado – January 2021

Each state’s law has its own nuances, ranging from the size of the employer for which the law is applicable to what exactly can and can’t be asked and when. Some, such as Alabama and New York, specifically prohibit employers from retaliating against an applicant for his or her refusal to disclose their wage history. Others, such as Illinois, also prohibit employers from soliciting salary history information from the applicant’s former employer. Additionally, while Alabama’s law doesn’t ban the question outright, it does prohibit employers from refusing to “interview, hire, promote, or employ” any job applicant who declines to answer.

Other than keeping abreast of the nuances and how they affect employers’ interviewing practices, employers also need to be mindful of the interaction between local and state laws.  For example, New York’s state law is more restrictive in terms of affected individuals than its New York City equivalent.  As such, employers within localities that have salary history bans need to ensure they are in compliance with both.

Some laws, especially the more recently passed ones, provide some guidance and protections for employers. In Kansas City, employers may ask whether applicants have expectations regarding salary, benefits, and other compensation. Kansas City, as well as Toledo, Ohio, also specifically state that the law does not apply to “voluntary and unprompted” disclosures of salary information by applicants. It is important to note though that even if the disclosure is voluntary, employers still are not permitted to rely on the information in determining the applicant’s compensation.

While salary history bans have been enacted at a rampant pace in 2019, not all states are completely onboard. In fact, both Michigan and Wisconsin took a harsh step in the opposite direction, passing laws prohibiting the passage of salary history bans by local governments. Yet, ironically, Michigan enacted legislation for state employment, while preventing local government from enacting at their own level.

Additionally, this issue is not without controversy. Namely, can salary history bans really rectify the issue at hand? Philadelphia’s ban on salary history was challenged based on a claim of violating the First Amendment’s free speech clause, and a federal district court judge agreed. While the “inquiry” portion of the rule was enjoined, the “reliance” portion remains valid. In his opinion, Judge Mitchell S. Goldberg noted that “it is not in dispute” that a gender pay disparity exists, but that the evidence did not sufficiently demonstrate that Philadelphia’s ban would reduce that disparity. Whether this opinion sets a precedent for challenges in other states will be a topic to watch in 2020.

The policy behind these laws is clear. Relying on past salaries to set current ones assumes the past salary was established fairly to begin with. Oftentimes, though, it wasn’t. As such, policymakers argue that basing current salaries on past potentially biased numbers only perpetuates pay gaps based on gender and other protected classes. The laws are designed to protect applicants from receiving offers for starting salaries that are inextricably linked to lower than average past salaries.

Employers may not like yet another legislative trend prohibiting yet another question during the interview and onboarding processes; however, they do need to begin embracing the change in 2020. In doing so, they may find some unexpected benefits. Every employer knows the right employee in the right position is invaluable. If they could shift their focus from worrying about overpaying to focusing on the value this person can add to their company, it would go a long way in moving forward. Many companies have already begun reviewing their pay policies. This transparency can also build trust with an applicant from the start because the information is clear – they know the salary range of the position and understand it has nothing to do with their prior salaries. This comes from a place of trust, rather than one of contention.

Key Takeaways for Employers:

  • Employers in all states should stay informed on the laws that are being passed with regard to salary history and pay equity.
  • Employers in any state that has a salary history ban, either statewide or in a locality that affects them, should review and update their hiring practices and job applications to ensure compliance with the laws.
  • Employers should review their employment verifications processes and background screening questionnaires to remove the question, if needed.
  • Employers should be mindful of remote employees and the various state laws around the country that affect them.
  • Employers should shift the discussion to the applicant’s expectations, rather than what he or she earned in the past.

Hire Image understands the intricacies of salary history bans and stays informed on, and compliant with, the ever-increasing changing laws.  For up-to-date information on salary history bans and how they may affect your workplace, please visit our Resource Guides or contact us to find out how we can help.

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