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The States of New York and New Jersey have recently enacted laws prohibiting employers from inquiring about or relying on salary history information in making hiring decisions. The laws, which take effect January 6, 2020 and January 1, 2020, respectively, are aimed at preventing employers from using salary history information as a condition of employment and combating salary inequality.

Specifically, New York’s salary history ban prohibits employers from: (1) relying on wage or salary history in determining whether to offer employment to, or in determining the wages or salary of, a job applicant; (2) seeking, requesting, or requiring (orally or in writing) the wage or salary history of a job applicant or current employee (a) as a condition of being interviewed, continuing to be considered for employment, or employment or promotion, or (b) from a job applicant’s current or former employer, current or former employee, or agent, or a current employee’s current or former employer^[1]; or (3) refusing to interview, hire, promote, employ or retaliate against a job applicant or current employee (a) based on their wage or salary history, (b) because they did not provide their wage or salary history in accordance with the law, or (c) because they filed a complaint with the New York State Department of Labor alleging a violation of the law.

Relatedly, New Jersey’s salary history ban prohibits employers from: (1) screening a job applicant based on their salary history; or (2) requiring a job applicant’s salary history to satisfy any minimum or maximum criteria (ostensibly salary or compensation).

Importantly, both laws allow salary history information to be considered under certain circumstances. For instance, both New York’s salary history ban and New Jersey’s salary history ban allow an employer to consider salary history if it is disclosed “voluntarily” and “without prompting.” In addition, New York’s salary history ban permits an employer to confirm wage or salary history if a job applicant or current employee responds to an offer of employment with wage or salary history information to support a higher wage or salary. Moreover, under New Jersey’s salary history ban, an employer may request written authorization from a job applicant to confirm salary history “after an offer of employment that includes an explanation of the overall compensation package has been made.”

One important difference between New York’s salary history ban and New Jersey’s salary history ban is that New York’s ban applies to job applicants and current employees whereas New Jersey’s ban only applies to job applicants. Accordingly, employers in New York should be careful not to consider salary history information of a current employee who is seeking a transfer, promotion, or reemployment opportunity. Unlike New York’s ban, New Jersey’s ban does not apply to applications for internal transfer or promotion and use of previous knowledge obtained as a consequence of prior employment.

Another important difference is that New Jersey’s salary history ban imposes additional and different obligations on employment agencies. While New York’s ban imposes the same obligations on an employer as an employment agency, including employment agency in the definition of a covered employer, New Jersey’s ban distinguishes between the two and their respective obligations. Namely, under New Jersey’s ban, a job applicant may provide salary history information to an employment agency they contacted to assist with searching for and identifying employment opportunities; however, the employment agency cannot share the applicant’s salary history with potential employers without the applicant’s express written consent.

As a reminder, covered employers in New York City, Westchester, Albany, and Suffolk County are already prohibited from inquiring about or relying upon salary history information. Specifically, New York City’s salary history ban prohibits an employer from inquiring about a job applicant’s salary history or relying on a job applicant’s salary history in determining salary, benefits, or compensation during the application process. Similar to New York’s salary history ban, New York City’s salary history ban permits an employer to consider salary history information if it is disclosed “voluntarily” and “without prompting.” However, unlike New York’s salary history ban, New York City’s salary history ban does not apply to applications for internal transfer or promotion and only applies to job applicants.

In addition, under New York City’s salary history ban, an employer or employment agency may conduct a background check (as permitted by applicable law) or otherwise verify non-salary related information, provided if salary history information is disclosed, such information is not used during the hiring process. Moreover, an employer or an employment agency may engage in a discussion with a job applicant about their expectations as to salary, commissions, benefits, and compensation, without inquiring about salary history, and may inquire or rely on a job applicant’s productivity, such as revenue, sales, or other production reports; volume, value, or frequency of sales; profits generated; and books of business, as such information does not fall within the definition of “salary history”. Nonetheless, employers and employment agencies should be sure not to request reports or other documents from job applicants that contain confidential or proprietary information of another employer or other third parties.

Accordingly, employers in New York and New Jersey should become familiar with the requirements of the new laws in their respective states to understand under what circumstances and when it is permissible to ask or rely on salary history information. In addition, employers should review their recruiting and hiring practices for compliance, including by removing improper questions on employment applications and ensuring that interviewers and hiring personnel are properly trained. This may include training hiring personnel to document any instance in which salary history is voluntarily disclosed.

^[1] Obviously, the prohibition against a current employer from seeking, requesting, or requiring a current employee’s wage or salary history, except under limited circumstances, appears to be nonsensical, as it seemingly requires employers to keep wage or salary history information from themselves. One potential way to address this concern is to ensure that the personnel who are responsible for making hiring decisions are not the same personnel who have access to such information.

For more information on the topic discussed, contact:

• Elizabeth E. Schlissel  |  schlissel@thsh.com  |  212-508-6714
• Stacey A. Usiak  |  usiak@thsh.com  |  212-702-3158
• Andrew P. Yacyshyn  |  yacyshyn@thsh.com  |  212-508-6792
• Andrew W. Singer  |  singer@thsh.com  |  212-508-6723
• Jason B. Klimpl  |  klimpl@thsh.com  |  212-508-7529
• Joel A. Klarreich  |  jak@thsh.com  |  212-508-6747