New Jersey Bans Salary History Inquiries
On July 25, 2019, following a similar trend in other states, New Jersey enacted a ban on employers inquiring into an applicant’s prior salary history. This ban goes into effect on January 1, 2020, and is intended to complement the Diane B. Allen Equal Pay Act, which became effective July 2, 2018.
The new law prohibits employers from requiring applicants to provide salary history or requiring that an applicant’s salary history meet any minimum threshold for consideration for a position. The law carries civil penalties of $1,000 for the first violation, $5,000 for the second, and $10,000 for each subsequent violation. The law also provides a private right of action permitting applicant’s to file suit for violations of the law.
The ban does not prohibit employers from asking job applicant’s of their salary expectations. Additionally, if applicants voluntarily disclose their past salaries, an employer may verify the salary and use that information in determining the applicant’s compensation. Employers should be aware, however, that salary history is not legitimate factor that would support a pay differential under the Equal Pay Act for substantially similar work. Thus, even though the salary ban would allow the use of that information if it was voluntarily disclosed, basing compensation on prior salary is a potential minefield that could result in a violation of the Equal Pay Act.
Because salary history is not a legitimate factor under the Equal Pay Act, New Jersey employers were and remain well advised to not inquire as to an applicant’s salary history even before the enactment of the salary history ban. Beginning January 1, 2020, New Jersey employers that have not updated their hiring practices to ensure compliance with the new laws will face even greater potential liabilities.
If you have questions about your business’s hiring or pay practices, please contact us at (201) 345-5412 or use our online scheduling page to set up a complimentary consultation.