United States: From Pay Equity To Pot—The 3 Major Issues Impacting Hiring In 2018

Last Updated: January 31 2018

The New Year rings in a new round of emerging legislation that is poised to make the job of screening and hiring candidates more complex for employers.

Three key issues that will impact the hiring process in 2018 include pay equity measures, ban the box laws, and marijuana legalization. Here are a few points for savvy employers to consider as they develop their compliance programs.

1. Pay Equity

The national trend toward pay equity will continue to gain momentum as more lawmakers contemplate initiatives to combat wage inequality. Pay equity measures help to close the more than $10,000 gap in earnings between men and women in the U.S., ensuring that salary is reflective of the candidate's merits and not gender.

Pay equity laws typically ban employers from asking job candidates about their prior compensation history unless certain circumstances have been met. Laws currently in effect include those in Delaware; New York City, New York; and California. A pay equity measure in Massachusetts becomes effective this summer, with Puerto Rico enforcing its law later this year. Oregon's law will become effective in 2019, but not enforced until 2024. Lawmakers are debating similar legislation in Illinois and New Jersey, amongst other places solidifying the belief that this will be the major subject of employment facing legislation in 2018.

What employers should know: To address pay equity laws, employers can 1.) develop new screening and hiring policies to exclude salary inquiry and verification in jurisdictions where pay equity laws have been enacted, or 2.) take a more holistic approach and eliminate the salary history question altogether.

For consistency in their approach employers should consider:

  • Creating a policy that adopts the requirements of the most stringent law. Not all pay equity laws are equal.
  • Conducting market and internal analyses for pay rates. This will help promote transparency with pay practices.
  • Scouring the hiring process to ensure questions about salary history are eliminated. That includes interview questions, employment applications, automated screening tools, applicant tracking systems, and HR systems.

2. Ban the Box Laws

Each year, 650,000 individuals are freed from incarceration, according to the U.S. Department of Justice, and most need a job. Yet, for many, a past conviction makes it difficult to land employment.

Ban the box laws attempt to give all candidates a fair chance during the hiring process by delaying or otherwise restricting an employer's inquiry into a candidate's former criminal history.

After a brief lull in new ban the box laws, there's a strong resurgence. California's statewide measure became effective on January 1, with Spokane, Washington also recently passing a ban the box measure. Lawmakers will be considering similar legislation in over a dozen jurisdictions in the first quarter of 2018 alone.

What employers should know: Employers should be aware of the timing of their inquiry, which should generally occur after a conditional offer, unless required by law or regulation, and any restrictions on reporting like arrests that did not result in a conviction or other sealed, expunged, pardoned, or juvenile records.

Employers should follow guidance from the Equal Employment Opportunity Commission (EEOC), which requests that employers conduct both a job relatedness test and an individualized assessment if a background check uncovers criminal history.

Indeed, these ban the box measures will require employers to become well versed in individualized assessments, which are particularly important in California's new law, and allow job candidates the opportunity to demonstrate that they are qualified for a job despite prior criminal history.

Finally, employers are reminded to provide all required notices and individualized assessments to candidates as necessary and hold the position open as long as a jurisdiction's ban the box requires.

3. Legalized Marijuana

The marijuana business is blooming with no signs of slowing growth. Recreational marijuana is now legal in seven states and Washington, D.C. while medical marijuana use is allowed in more than two dozen.

Legalized marijuana presents a new set of challenges for employers during and after the hiring process. While some states have legalized marijuana, it is still considered illegal at the federal level. With marijuana legalization being considered by several states in 2018, it will be interesting to see how federal prosecution plays into the evolution of marijuana laws at the state level.

What employers should know: Absent clear direction at the federal level as a best practice, employers must decide how they will comply with state and local laws.

For employers, the primary considerations are accommodation and nondiscrimination of users. No laws require employers to provide accommodations for recreational marijuana users. However, employers may need to accommodate individuals who lawfully use medical marijuana, and employers may also be barred from discriminating against medical marijuana use dependent upon industry.

Employers must work with their legal counsel to ensure they understand the law and then draft a clear drug policy that addresses both marijuana accommodation and nondiscrimination as applicable. That policy should be reflective of industry, job types, and corporate culture, and made transparent to candidates and employees alike.

As organizations look to hire in 2018, taking aim at addressing pay equity, ban the box, and marijuana legalization as part of the organization's compliance programs can help employers stay ahead of litigation risks and enforcement measures that can derail their growth.

Authored by Alonzo Martinez, Associate Counsel for Compliance, HireRight.

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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