The push to eliminate inquiries into job applicants’ salary history continues, as New Jersey has enacted a statewide law that will restrict employers from obtaining and utilizing applicants’ salary history information during the hiring process.

The new law, which will take effect on January 1, 2020, will make it an unlawful employment practice for any employer to: (1) screen a job applicant based on the applicant’s salary history (defined as including, but not limited to, prior wages, salaries, or benefits); and/or (2) require that the applicant’s salary history satisfy any minimum or maximum criteria.

Notwithstanding these restrictions, an employer may consider salary history in determining salary, benefits, and other compensation for an applicant, and may verify the applicant’s salary history, only if the applicant “voluntarily, without employer prompting or coercion” provides the employer with such salary history information.  However, an applicant’s refusal to volunteer compensation information “shall not be considered in any employment decisions.”  Additionally, an employer may request that an applicant provide a written authorization to confirm salary history but only after an offer of employment has been made that “includes an explanation of the overall compensation package has been made to the applicant.”

The law further states that applicants may provide salary history information (including information regarding the applicant’s experience with incentive or commission plans) to an employment agency contacted by the applicant for assistance in searching for and identifying employment opportunities.  However, the employment agency may not share the information with potential employers without the express written consent of the applicant.

The new law will not apply to:

• applications for internal transfer or promotion, or use by the employer of previous knowledge obtained as a consequence of prior employment with the employer;
• actions taken by an employer pursuant to any federal law or regulation that expressly requires the disclosure or verification of, or otherwise requires knowledge of, salary history for employment purposes;
• background checks seeking non-salary related information provided that, when requesting information for the check, the employer specifies that salary history information is not to be disclosed; and
• inquiries regarding an applicant’s “previous experience with incentive and commission plans and the terms and conditions of the plans,” provided that the employer:
  • does not seek or require the applicant to report information about the amount of their earnings in connection with the plans; and
  • does not make any inquiry regarding the applicant’s previous experience with incentive and commission plans unless the position includes an incentive or commission component as part of the total compensation program.

And in a different approach than taken by some other jurisdictions (including New York City’s), the new law states that it will n­ot prevent employers who do business, employ persons, or take applications for employment in states other than New Jersey from including an inquiry regarding salary history on an employment application, so long as immediately preceding the inquiry it states that an applicant for a position in New Jersey is instructed not to answer.

Employers violating the law will be subject to civil penalties ranging from $1,000 (for an initial violation) to $10,000 (for multiple violations).

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We will continue to monitor and report on further developments regarding this new law.

 

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