Did you know that Tuesday April 10 was Equal Pay Day? Equal Pay Day came into being in 1996 to raise public awareness of the difference between men’s and women’s pay. I’ll come back to this point shortly. Today I want to talk (or, more appropriately, write) to you about the subject of salary history inquiries. If you want the distilled version here it is: Don’t ask or talk about it with applicants. It’s either illegal or a really bad idea for legal reasons. Some of you may feel that’s all you need to know. If so, you can stop reading here and I won’t be insulted. Many of you may want to know why, or at least how to determine compensation if you don’t ask. If your one of those people, keep reading and I’ll tell you.
So why shouldn’t you ask a candidate about current or past salary–aside from Miss Manners telling you it’s bad etiquette? In some states and localities laws specifically make it illegal. Let’s have a look.
Oregon’s law was the first one to take effect on October 6. It bans inquiries into an applicant’s salary history. As of January 1, 2019, if you ask about salary history you can be sued. By 2024 you could face punitive damages for doing so.
Delaware has a similar ban that took effect in December. Delaware also prohibits employers from seeking this information from current or former employers and cannot base screening criteria on prior salary. There are two small loopholes here. You can discuss salary expectations with a candidate, and you can confirm salary history after you have already made an offer. (Now, in case you get any ideas here, that does not mean that you can then rescind or revise the offer if you get confirmation of a lower salary history. I’ll touch on that point in a moment.)
California passed a law that took effect on January 1. California already had legislation stating that prior salary alone could not justify pay disparities. The new law says that ” no employer may rely on an applicant’s prior salary history “as a factor in determining whether to offer employment . . . or what salary to offer an applicant.” Employers cannot seek this information about an applicant “orally or in writing” or “directly or indirectly”–meaning you can’t ask someone else about a candidate’s salary history. Employers must, on request provide applicants a pay scale for the position in question.
Massachusetts’ law takes effect on July 1. In addition to the same prohibitions as Delaware, this law also states that post-offer confirmations with former employers first require the applicant’s written consent. The law does afford some protections for pay variations that based on a bona fide merit or seniority system—as long as employee seniority isn’t reduced for taking pregnancy-related leave or Family and Medical Leave Act time off. Certain pay variations based on geography, education and training, and travel requirements are also permissible. There is also a defense for employers who “completed a self-evaluation of its pay practices in good faith and can demonstrate that reasonable progress has been made toward eliminating compensation differentials based on gender for comparable work in accordance with that evaluation.”
New York and Maryland: have introduced similar legislation. Stay tuned for more developments there.
As for localities and territories, New York City, Philadelphia, New Orleans, Pittsburgh and Puerto Rico have similar laws in effect. As you can see this is a growing trend, so expect other states, territories and localities to follow suit.
What if you do not employ people in any of these locations. You still shouldn’t ask about salary history–and again, it’s not because Miss Manners would disapprove. Here’s why: If you base an employee’s pay on their prior pay, you may be perpetuating the pay gap. What if that practice, which admittedly is neutral on its face, results in your female employees receiving less pay than male employees for the same or equivalent work? Guess what: you are leaving yourself wide open for a pay discrimination claim under the Equal Pay Act. (See what I did there? I just brought us back to my point about Equal Pay Day.) Remember that discrimination doesn’t only include disparate treatment, but disparate impact. If basing salary on past salary results in women being paid less than men, your female employees will have viable pay and sex discrimination claims. So even if you are not in a location specifically banning salary history questions, don’t ask!
What if you really don’t know what the market rates are? What if you really are not sure what’s a fair salary to offer your candidate? You can discuss salary expectations with a candidate. If you already have others in similar positions, then offer pay substantially similar pay. If there is a significant difference in experience, expertise, education, you can adjust accordingly–and document the reason for the disparity.
OK, I think you get the point. See you next week.
Contents of this post are for educational/informational purposes only, are not legal advice, and do not create an attorney-client relationship. Consult with competent employment counsel in the state(s) in which you employ people with your specific questions.
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