On January 1, 2020, New Jersey joined a diverse group of 20 states, including Alabama, California, Illinois, Louisiana and New York, putting into effect legislation that bars employers from screening job applicants based on salary history. The law applies to all employers, regardless of size.
What the New Employment Law States
Employers may no longer inquire about salary history, including prior wages, commissions or benefits, prior to making an offer of employment that includes a description of the complete compensation package, including benefits, that is part of the offer of employment. After an offer has been extended, employers must obtain written authorization from an applicant before contacting prior employers to confirm salary history. The law also prohibits employment agencies from sharing salary history without the prior written consent of a job applicant.
Applicants may volunteer information about salary history, but not offering salary history, or declining to provide it when asked, may not be considered as part of an employment decision.
The new law makes several exceptions available to employers. Employers may, pursuant to applicable federal law or regulation, require disclosure, verification or knowledge of salary history. Although an employer may not inquire about an applicant’s history of commission or incentive compensation, inquiry may be made with respect to an applicant’s experience with those forms of compensation and the terms and conditions of such plans. Employers are also permitted to verify non-salary information as part of a background check.
Next Steps for Employers
All employers should educate those of their employees involved in screening and hiring decisions and notify third party recruiters, and firms providing background checks, not to supply salary-related information about applicants for employment. Application forms and processes should be scrubbed to eliminate inquiries that might, or might be perceived as, soliciting salary history information.
Laws barring consideration of salary history are driven by a growing trend to reduce racial and gender pay gaps by restricting access to information that, when considered as part of the hiring process, has a disparate and negative impact on women and people of color.
For more information regarding employment law and additional business law consulting, please contact Praxis Legal Solutions.