When applying for a job, it is relatively common for a potential employer to question a job applicant about his or her salary history.  Employers often see these questions as a tool for screening applicants and setting salary expectations.  They also use these questions for determining a potential employee’s relative market value.  However, many scholars feel that using past salary is discriminatory as statistics show that women make roughly 83% of what men make for similar employment.  Asking about prior wages, some argue, helps to perpetuate this disparity as women’s wages start lower than men’s wages and that impact is compounded over time—especially if women are asked about their salary history during the hiring process.

Based on a theory of restoring balance in the salary negotiation process, at least four states or territories (Massachusetts, Oregon, Delaware, California, and Puerto Rico) and several cities, including New York City, San Francisco, and Philadelphia, have passed legislation banning employers from asking job candidates their prior salary history or using that information in setting an employee’s salary.   In Illinois, the governor vetoed salary ban legislation, but the Illinois House has already voted to override the veto and an override vote is pending in the Illinois Senate (which should have a vote prior to November 9, 2017).  In addition to the ban on salary history inquiries, the Illinois legislation makes it unlawful for employers to demand that employees sign a contract or waiver that would restrict an individual’s ability to disclose or discuss his or her wages.  In some jurisdictions, such as California, an applicant can request that the prospective employer provide a pay scale for the job in question.  (In California, it is already unlawful to have a policy preventing an employee from disclosing and discussing his or her wages.)  The New York City ordinance became effective on October 31, 2017.

In Philadelphia, the local chamber of commerce filed a lawsuit in federal court to prevent implementation of the city’s salary ban.  While the chamber lauded the goal of eliminating gender-based pay disparities, it alleged that the ordinance’s ban on questions concerning salary history violates employers’ rights to free speech.  The issue is pending before the district court and the City has agreed to delay enactment of the ban pending a ruling on the chamber’s preliminary injunction motion.  Numerous parties have filed amicus briefs for and against the statute, including national chambers of commerce.  The City (and amici such as the ACLU) argue that the ordinance is no different from other civil-rights laws that bar employers from using information about potential employees in a discriminatory manner.  For example, the Americans with Disabilities Act is designed to prevent discrimination because of disability and asking job applicants whether they have a disability. Moreover, even if the ordinance does limit some of the employer’s free speech rights, the ordinance – which is aimed directly at the speech that causes the harm the City seeks to prevent – survives that standard of review.  Briefing on the matter was just completed and any ruling by the trial judge is likely to be appealed to the federal appellate court.

Employer groups are watching the Philadelphia case closely.  If it is successful – and even if it is not – these statutes and ordinances are likely to face constitutional challenges across the country.  Similarly, employers will watch how the statute rolls out in New York City.  If you have any employees in New York City, you need to be aware of this statute and ensure compliance as penalties for non-compliance can be extensive.

Removing salary history from the employment equation is a major change for many employers.  Irrespective of the results of these pending court matters, employers in the states, cities and territories with the anti-salary history rules need to immediately conform their hiring practices to the new regime.  Moreover, even if an employer is located outside of the jurisdictions that will preclude such questions, employers must tread carefully if it has offices and employees in jurisdictions with the law (such as New York City, where the ban became effective on October 31, 2017 or California, where the ban becomes effective January 1, 2018).  Finally, the laws intent is to separate future salary from the past. Employers should consider if a candidate’s salary history information is, in fact, necessary or if there are other objective criteria it can rely upon in setting the salary.  Indeed, to the extent that there are disparities in salaries between persons of different genders (or based on other protected characteristics), objective reasons for those differences are a necessary defense.

This new line of statutes and ordinances is also a reminder that employment laws change constantly and, as is the case of the New York City Ordinance, the changes may become effective on dates other than January 1.  Consequently, employers should stay up-to-date on employment law changes and review their policies and procedures for compliance with the law regularly. 

If you have questions about this article or any other employment-related matter, please call John K. Rubiner at 310/441-0500 or email him at jrubiner@gerardfoxlaw.com.  Mr. Rubiner chairs Gerard Fox Law’s Labor and Employment Group.