New Jersey Adds to Recent Flood of Salary-History Inquiry Bans

Continuing the recent deluge of salary-history inquiry bans, on July 25, New Jersey Lieutenant Gov. Sheila Oliver signed Bill A1094 into law. Like other recent laws limiting salary-history inquiries, New Jersey's law prohibits employers from screening job applicants based on the applicant's prior salary history, which includes prior wages, salary and benefits. 

In addition, employers may not require that an applicant's salary history satisfy any minimum or maximum threshold to be considered for a job. The new law takes effect on Jan. 1, 2020.

The law provides for a private right of action as well as civil penalties from $1,000-$10,000 per violation depending on the circumstances. The law does not expressly define what conduct will be considered as a single "violation" for purposes of calculating penalties.

Fortunately for employers, New Jersey's law contains examples of expressly permitted activities and exceptions from coverage in certain key areas:

• Employment application: If an employer has a multistate employment application that includes operations outside of New Jersey, the employer is allowed to have a salary-history question with a disclaimer that an applicant for a position located in whole or in substantial part in New Jersey is instructed not to answer the question.
• Voluntary disclosure: If an applicant voluntarily discloses (defined as without prompting or coercion) his or her salary history, the employer may both: (1) verify that the information the applicant provided was accurate and (2) use the information to determine the applicant's compensation.
• Post-offer verification: An employer may obtain written authorization from the applicant to confirm salary history after an offer of employment that contains an explanation of the offered "overall compensation package."
• Internal transfers or promotions: The law does not apply to applications for internal transfer or promotion.
• Background checks: If an employer informs its background check vendor that salary-history information is not to be disclosed to the employer, but for some reason the background check includes a disclosure, the disclosure will not violate the law. However, the employer will have to destroy the salary-history information and not use it.
• Incentive and commission plans: Employers are allowed to discuss the "terms and conditions" of incentive and compensation plans the applicant was subject to at a prior employer, provided that: (1) the employer does not ask about the specific dollar amounts involved in the plans and (2) the job the applicant applied for with the prospective employer includes an incentive or commission component.

New Jersey's law also contains perhaps the most nuanced approach to employment agencies compared to similar salary-history laws.  The law provides that (a) applicants may disclose salary-history information and information regarding the applicant's experience with incentive and commission plans to employment agencies the applicant is using to search for work and (b) the employment agency may provide that information to employers as long as it has the applicant's express written consent.  Employers will have to await further guidance as to how courts and the N.J. Commission of Labor and Workforce Development will interpret the specifics of this provision given the overarching prohibition on employers' using salary history information to screen applicants otherwise.

Finally, unlike some recent laws and ordinances, New Jersey's law does not require that the employer affirmatively disclose a wage scale for applicants.

Next Steps

Employers with operations in New Jersey or other states with salary-history-inquiry bans should consider evaluating the contents of job applications, interview guidelines or templates, recruiter instructions, and background-check vendor instructions to ensure that no impermissible salary-history inquiries or screening is conducted.

Employers with operations in multiple states should consider forming a working group to assess business needs with respect to applicant wage data and the best multistate or "50-state" approach to salary-history inquiries and use given those needs. 

As New Jersey's law demonstrates, there is no template or model law adopted for salary-history bans, as every law is unique in its coverage, prohibitions and exemptions.

Employers may want to consider appointing an employee with subject matter experience on this issue (or consulting employment counsel) to remain up-to-date on salary-history-inquiry bans as well as the full array of state and local laws impacting hiring compliance, such as the Fair Credit Reporting Act, ban-the-box laws and fair chance acts, credit check bans, social media inquiry prohibitions, revamped pay-equity laws and others.

William J. Simmons is an attorney with Littler in Philadelphia. © 2019 Littler. All rights reserved. Reposted with permission.