Reminder for Employers: Ban on Pay History Inquiries Effective January 25
As a result of a July 2019 amendment to the New Jersey Law Against Discrimination (“LAD”), effective January 25, 2020, it is unlawful for any employer to screen a job applicant based on the applicant’s salary history. This includes but is not limited to, the applicant’s prior wages, salaries, or benefits. Employers will also be prohibited from requiring a job applicant’s salary history to satisfy any minimum or maximum criteria. Employers must take note and ensure compliance.
Under the new law, employers may only consider salary history in determining salary, benefits, and other compensation for job applicants, and for purposes of verifying job applicants’ salary histories, if job applicants voluntarily provide employers with information regarding their salary histories without any prompting or coercion from the employer.
Employers are still permitted to request that job applicants provide employers with a written authorization to confirm salary history, but only after an offer of employment, including an explanation of the job applicant’s overall compensation package, has been made to the job applicant.
When conducting background checks to verify job applicants’ disclosure of non-salary related information, employers must specify that salary history information is not to be disclosed. If, despite that specification, salary history information is disclosed, employers must destroy that information and refrain from considering it when determining the salary, benefits, or other compensation of the job applicant.
Obtaining or divulging information about salary history is still permitted in certain limited circumstances. For example, the new law does not apply to applications for internal transfer or promotion with an employee’s current employer or use by the employer of previous knowledge obtained as a result of prior employment with the employer. Additionally, the new law does not apply to any actions taken by an employer in accordance with any federal law or regulation expressly requiring the disclosure or verification of salary history for employment purposes or knowledge of salary history to determine an employee’s compensation.
Employers who violate the new law will be liable for a civil penalty in an amount not to exceed $1,000 for the first violation, $5,000 for the second violation, and $10,000 for each subsequent violation. Additionally, if the job applicant is a member of a protected class under the LAD, an employer who violates the provisions of the new law will be subject to certain additional penalties.
At this juncture, New Jersey employers must evaluate the contents of their job applications, background check procedures, and interviewing and recruiting practices to ensure that no unlawful salary history inquiries or screenings are conducted.
If you have any questions or concerns about New Jersey’s new law pertaining to job applicant screening and salary history inquiries, please do not hesitate to reach out to the Employment and Labor Practice Group at Laddey, Clark & Ryan, LLP: Thomas N. Ryan Esq. (firstname.lastname@example.org), Ursula H. Leo, Esq. (email@example.com), or Nicole C. Tracy, Esq. (firstname.lastname@example.org). Our attorneys can also be reached by phone at (973) 729-1880.