For decades, it has been common practice for employers to ask applicants about their compensation history during job interviews. The applicant’s answer can provide employers with valuable information about an applicant’s skill set, relevant experiences, and expectations. However, this longstanding practice is being challenged by lawmakers in state and municipal jurisdictions across the country.
Lawmakers have begun introducing legislation prohibiting employers from asking about a candidate’s salary history. They argue that certain groups, including women and minorities, face discrimination in the job application process and in salary negotiations. One of the main concerns is that these individuals will carry lower salaries for their entire careers because their wages at previous jobs were set unfairly. This legislation purports to help employers set compensation based on merit, as opposed to gender, race, or ethnicity.
On August 1, 2016, Massachusetts became the first state to pass a so-called “Pay-inquiry ban,” making it illegal for private employers to ask about a job candidate’s salary history. Similar laws were passed recently in Delaware and Oregon, and are scheduled to become effective December 2017 and January 1, 2019, respectively. At least four additional states and jurisdictions are actively considering enacting similar legislation, including New York, New Jersey, Pennsylvania, and Washington D.C.
On a local level, major cities across the country have passed or proposed similar ordinances, including New York City, Philadelphia, New Orleans, Pittsburgh, and San Francisco. Philadelphia was the first major U.S. city to pass a pay-inquiry ban ordinance. Philadelphia’s law was set to take effect on May 23, 2017, but when the Chamber of Commerce for Greater Philadelphia filed an amended request for an injunction to block the ordinance on June 13, 2017, the city delayed enforcement (Chamber of Comm. of Greater Philadelphia v. City of Philadelphia, et al., No. 17-cv-1548, E.D. Pa. June 13, 2017). The Philadelphia ordinance makes it an unlawful employment practice for an employer, employment agency, or employee or agent thereof to “inquire about a prospective employee’s wage history, require disclosure of wage history, or condition employment or consideration for an interview or employment on disclosure of wage history.” The ordinance also includes an anti-retaliation provision, prohibiting employers from taking adverse action against an applicant or employee who does not comply with a wage history inquiry. New Orleans’ and Pittsburgh’s laws took effect in January 2017 and New York City’s law will take effect on October 31, 2017.
Because these laws are relatively new, it is unclear how or to what extent they will be enforced, but it is important to note that penalties for non-compliance vary significantly. The New York City Commission on Human Rights, the agency charged with enforcing the new law in the five boroughs, may impose a civil penalty of up to $125,000 for an unintentional violation and up to $250,000 for a “willful, wanton or malicious act.” Additionally, an individual may bring a civil lawsuit for violations of the law and seek back pay, compensatory damages, and attorneys’ fees. In contrast, Delaware’s law provides for a civil penalty of “not less than $1,000 nor more than $5,000 for the first offense and not less than $5,000 nor more than $10,000 for each subsequent violation.” Penalties for non-compliance in Philadelphia are harsh and include potential compensatory and punitive damages, attorneys’ fees, court costs, injunctive relief and administrative penalties. Additionally, penalties for repeat and/or willful violations include a fine of up to $2,000 per violation and in certain cases, imprisonment of up to 90 days.
Best Practices for Navigating Interviews in Pay-Inquiry Ban Jurisdictions
An employer remains able to consider a job applicant’s salary history if it is disclosed voluntarily and without prompting by the employer. An employer is free to engage in discussions regarding an applicant’s salary expectations, but the interviewer must be mindful of the applicable restriction imposed in his jurisdiction. A hiring manager that asks about compensation expectations in a way that places undue pressure on a candidate to disclose such information may run afoul of the law. To ensure compliance with a pay-inquiry ban limitation, employers can take the following actions:
Revise any hiring materials such as job applications, candidate questionnaires, and background check forms, to remove any and all salary questions.
Provide notice to managers, hiring coordinators, and interviewers of the pay-inquiry ban law and any consequences of non-compliance.
Provide substantive training relating to interview techniques which will ensure compliance with the law.