Pay Equity Legislation: Compensation Based on Applicants’ Previous Salary a Thing of the Past
In recent years there has been a growing trend of equal pay legislation seeking to eliminate discriminatory pay disparities in the workplace. In August 2016, Massachusetts passed its new Pay Equity Law and became the first state to prohibit employers from seeking the salary history of prospective employees until after an offer of employment with compensation has been extended. The new law also bans employers from contacting prospective employees’ former employers for the purpose of obtaining their past compensation. The bill was signed into law on August 1, 2016 by Massachusetts Governor Charlie Baker and will take effect on January 1, 2018.
While Massachusetts was the first jurisdiction to pass “ban-the-box” type legislation with respect to salary history, it likely will not be the last. On August 16, 2016, a similar bill was introduced to the New York City Council to amend the New York City Human Rights Law to make it unlawful for an employer to inquire about the salary history of an applicant directly or by searching publicly available records or reports. Moreover, the proposed bill would prevent employers from relying on the salary history of an applicant in making compensation decisions at any stage during the hiring process unless the applicant unprompted and voluntarily disclosed such compensation history.
Similar legislation has been proposed in New Jersey to prohibit employers from seeking the salary history of prospective employees and California has a bill (awaiting its governor’s signature or veto) that would ban employers from using salary history as a justification for pay differences between men and women performing substantially similar work. At the federal level, Congress will soon be faced with proposed legislation on this issue. Representative Eleanor Holmes Norton (D-D.C.) has stated that she will introduce a bill with co-sponsors – Representatives Rosa DeLauro (D-Conn.) and Jerrold Nadler (D-N.Y.) – that makes it unlawful for employers to ask prospective employees about past compensation and prohibits employers from using such salary history in making compensation decisions.
This salary history “ban-the-box” type legislation could very well become the norm across jurisdictions in the U.S. Accordingly, should such laws take effect, employers in those jurisdictions will need to remove salary history questions from job applications and ensure interviewers and hiring personnel avoid asking prospective employees compensation-related questions during the hiring process.
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