United States: Delaware Enacts Law To Address Gender Pay Gap By Prohibiting Employers From Requesting Compensation History Of Job Applicants

Last Updated: June 27 2017
Article by Joon Hwang

On June 14, 2017, Delaware Governor John Carney signed a new law to address the pay gap between men and women by prohibiting prospective employers from asking job applicants about their salary history.  Delaware's law, which garnered significant bipartisan support, is based on the same rationale used for similar measures enacted in Oregon, Massachusetts, New York City, and Philadelphia:  pay inequities are perpetuated when current pay is based on past employer decisions that could have been discriminatory based on gender.  The new law aims to reduce persistent pay gaps between the genders by prohibiting inquiry into a job applicant's compensation history, with the hopes of encouraging employers to proactively assess pay based on other factors, such as merit, experience, and the market.  

Unlike other salary history laws, Delaware's law only prohibits an employer or its agent from "screen[ing] applicants based on their compensation histories, including by requiring that an applicant's prior compensation satisfy minimum or maximum criteria" or "seek[ing] the compensation history of an applicant from the applicant or a current or former employer."  "Compensation" is defined broadly to include wages as well as "benefits and other forms of compensation."  It is unclear how broad "other forms of compensation" will be interpreted. The law does not, like others, specifically prohibit employers from setting compensation based on prior salary history, if the job applicants voluntarily disclose their prior compensation history.   

The new law makes clear that an employer or its agents may discuss and negotiate with job applicants about their compensation, so long as salary history is neither requested nor required.  Nor does the law expressly prohibit voluntary discussions of past salary history.  Finally, an employer or its agent may further request and obtain compensation history, but only after an offer of employment with terms of compensation has been extended, and for the sole purpose of confirming the job applicants' compensation history.

Delaware's law explicitly states that an employer will not be liable for the acts of its agent (who is not an employee), provided it can demonstrate that the agent was informed of the requirement of the law and instructed to comply. This provision was included to address employers' concerns about liability when using outside recruiters – especially when located outside of Delaware – because they often operate outside the direct control of the employer and may not be fluent in Delaware law. 

Importantly, the new law clarifies that "interviewing and hiring for a single position shall constitute a single violation."  In other words, if an employer uses an application or interview questionnaire that asks a prohibited question for a single position, regardless of the number of job applicants that may be subject to the prohibited question, there would only be one violation. 

The new law provides the Delaware Department of Labor ("DDOL") the right to enforce and impose civil penalties for any violations of the new law. An employer or employer's agent that violates the new law is subject to a civil penalty of not less than $1,000 nor more than $5,000 for the first offense and not less than $5,000 nor more than $10,000 for each subsequent violation. The DDOL also has authority to file a civil penalty claim stemming from any violation of the new law against the employer in a court of competent jurisdiction.    

Delaware's law will be effective December 2017. The new law requires the DDOL to post requirements of the law on its website and perform "outreach as necessary to educate employers of the requirements ..." As such, Delaware employers should keep a keen eye on the DDOL's efforts to ensure compliance with the new law. Further, employers should be on the lookout for a potential legal challenge to the validity of the law under the First Amendment, like the one currently pending regarding the Philadelphia salary history ordinance.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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