New Jersey Law Bans Salary History Inquiries
On July 25, 2019, New Jersey became the latest state to restrict salary history inquiries. The new law (NJ Assembly Bill 1094) goes into effect on January 1, 2020 and prohibits employers from (1) screening job applicants based on the applicant’s salary history, and (2) requiring that the applicant’s salary history satisfy any minimum or maximum criteria.
If an applicant voluntarily provides the employer with his or her salary history, without prompting or coercion, an employer may consider salary history and may verify the applicant’s salary history. But, an applicant’s refusal to volunteer compensation information may not be considered in any employment decisions.
After a job offer including an explanation of the compensation package has been made to the applicant, however, employers may request that the applicant provide the employer with a written authorization to confirm the applicant’s salary history.
Multi-state employers may still include salary history questions on their employment applications as long as the application includes a statement immediately preceding the question that applicants for positions in New Jersey are not to answer the question.
There are certain circumstances in which the law does not apply, however. The most prominent of these include (i) applications for internal promotions and transfers, (ii) the employer’s consideration of the applicant’s earnings during prior employment with the employer, and (iii) inquiries about the applicant’s experience with commission or incentive compensation plans. Regarding such experience, the employer may not seek information about the applicant’s earnings in connection with the plans and the position for which the applicant is applying must include an incentive or commission component as part of the total compensation program.
Applicants may provide salary history information to employment agencies, but the employment agency may not share this information with potential employers without the express written consent of the applicant.
Penalties for violation of this law include a fine of $1,000 for a first offense, $5,000 for a second offense, and $10,000 thereafter. In addition, if the applicant is a member of a protected class under the New Jersey Law Against Discrimination (NJ LAD), the law provides that employers may be subject to certain penalties under the NJ LAD for violation, but will not be subject to punitive damages.
This law is part of a growing trend of state and local laws banning salary history inquiries. New Jersey employers should familiarize themselves with this new law and take steps to comply such as revising their employment applications and training managers.
If you have questions about New Jersey’s salary history inquiry ban or how it may affect the hiring process for your business, please contact Harry Horwitz at firstname.lastname@example.org, Megan Christensen at email@example.com, or the Stevens & Lee attorney with whom you regularly work.
This News Alert has been prepared for informational purposes only and should not be construed as, and does not constitute, legal advice on any specific matter. For more information, please see the disclaimer.