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New Jersey Restricts Pre-Hiring Consideration of Salary History Information

On July 25, 2019, New Jersey became the latest of a growing number of states that now prevent employers from requesting salary history information about applicants as part of the pre-hiring process.  The new law bars employers from screening a job applicant based upon an applicant’s salary history or requiring that the applicant’s salary history be disclosed or satisfy any minimal or maximum criteria.  As part of the law’s legislative history, several sponsors indicated that this law is designed to help enforce the mandates of the state’s Equal Pay Act that was passed a few years ago.

While employers may not request salary history information, salary information may still be considered if the applicant, without employer prompting or coercion, voluntarily provides such information to the employer.  An applicant’s refusal to voluntarily provide such information cannot be considered in the making of any employment decisions. Moreover, the law also allows employers to request that an applicant provide a written authorization to confirm salary history after an offer of employment that includes an explanation of the overall compensation package has been made to the applicant.

The law does not apply in the following situations: (1) to internal transfers or promotions within an employee’s current employer, or use by the employer of previous knowledge obtained as a consequence of prior employment with the employer; (2) to any actions taken by an employer pursuant to any federal law or regulation that expressly requires the disclosure or verification of salary history for employment purposes, or requires knowledge of salary history to determine an employee’s compensation; (3) to any attempt by an employer to obtain, or verify a job applicant’s disclosure of, non-salary related information when conducting a background check on the job applicant, provided that when requesting information for the background check, the employer shall specify that salary history information is not to be disclosed; and (4) to employer inquiries regarding an applicant’s previous experience with incentive and compensation plans and the terms and conditions of those plans, provided that the employer shall not seek or require the applicant to report information about the amount of earnings of the applicant in connection with those plans, and that the employer shall not make any inquiry regarding the applicant’s previous experience with incentive and commission plans unless the employment opening with the employer includes an incentive for compensation component as part of the total compensation program.

Furthermore, if an employer does business in other states besides New Jersey, an employer may include a question about salary history on a job application, but it must expressly indicate that if the applicant is seeking a position in New Jersey, the applicant need not answer the salary history inquiry.

Any employer who violates the law shall be liable for a civil penalty in an amount not to exceed $1000 for the First Violation, $5000 for the Second Violation, and $10,000 for each subsequent violation. The fine is collectible by the New Jersey Commissioner of Labor and Workforce Development in a summary proceeding pursuant to the New Jersey Penalty Enforcement Law.

Finally, while the new law precludes an employer from requesting salary information from an applicant, an employer is not prohibited from acquiring salary history information that is publicly available, but an employer cannot retain or consider that information when determining salary, benefits, or other compensation of the applicant, unless the applicant voluntarily, without employer prompting or coercion, provides the employer with salary history.

This new law does not go into effect until the first day of the sixth-month next following enactment. Accordingly, employers have until January 1, 2020 to bring its pre–hiring practices in line with these new requirements.  Thus, employers should begin today to revise employment applications, where salary history information is requested, and likewise start to train all persons involved in the pre-hiring process about the prohibition of asking for (and consideration of) salary history information as part of any hiring determinations.

 


Ralph R. Smith, 3rd is Co-Chair of the Employment and Labor Practice Group. He practices in employment litigation and preventative employment practices, including counseling employers on the creation of employment policies, non-compete and trade secret agreements, and training employers to avoid employment-related litigation. He represents both companies and individuals in related complex commercial litigation before federal states courts and administrative agencies in labor and employment cases including race, gender, age, national origin, disability and workplace harassment and discrimination matters, wage-and-hour disputes, restrictive covenants, grievances, arbitration, drug testing, and employment related contract issues.

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