United States: New Jersey Joins Jurisdictions Banning Salary History Inquiries

Executive Summary: New Jersey employers will no longer be able to ask applicants for salary history or use an applicant's prior wages, salary, or benefits to make compensation decisions unless the information is voluntarily disclosed by the applicant. The law will go into effect on January 1, 2020.

On July 25, 2019, New Jersey's Acting Governor Sheila Oliver signed into law Assembly Bill 1094, prohibiting employers from requiring job applicants to disclose their salary history, including prior wages, salaries or benefits. This is another step Governor Murphy's administration has taken in strengthening equal pay protections for New Jersey workers, including 2018's Diane B. Allen Pay Equity Act.

The bill prohibits employers in the Garden State from: (1) screening job applicants based on the applicant's salary history; or (2) requiring an applicant's salary history satisfy any minimum or maximum criteria. Employers may consider salary history in determining salary, benefits, and other compensation, and may verify an applicant's salary history, if the applicant voluntarily, without employer prompting or coercion, provides the employer his or her salary history. Employers may also, after an offer of employment which includes an explanation of the overall compensation package has been made to the applicant, request the applicant provide the employer a written authorization to confirm salary history. However, employers may not consider an applicant's refusal to volunteer information in any employment decisions.

The prohibition does not apply to applications for internal transfer or promotion or an employer's use of previous knowledge obtained as a consequence of prior employment with that employer. The prohibition also does not apply to any actions taken by an employer pursuant to any federal law or regulation that expressly requires disclosure or verification of salary history for employment purposes, or requires knowledge of salary history to determine an employee's compensation. Also excluded from the prohibition are any actions by an employer to obtain, or verify an applicant's disclosure of, non-salary information when conducting a background check on the applicant, provided that the employer specifies salary information is not to be disclosed and if nevertheless disclosed, the employer does not retain or consider the information when determining salary, benefits, or other compensation. In cases where the position involves incentive or commission plans, the employer may also inquire regarding an applicant's previous experience with incentive and commission plans and the terms and conditions of those plans, provided the employer does not seek or require the applicant disclose information about the applicant's amount of earnings in connection with the plans.

The bill also applies salary history limitations to employment agencies. While applicants may provide salary information to employment agencies contacted by the applicant for assistance in searching for and identifying employment opportunities, the agency may not share the information with potential employers without the express written consent of the applicant.

Employers with multi-state operations may continue to use employment applications requesting salary history, but must include an instruction to applicants for positions physically located in whole or "substantial part" in New Jersey not to answer the question.

Employers who violate the new rules face civil penalties, including fines of up to $1,000 for the first offense, $5,000 for the second and $10,000 for any subsequent violations, collectible by the Commission of Labor and Workforce Development in a summary proceeding.

Because A1094 amends New Jersey's Law Against Discrimination, employers can face lawsuits from applicants who are also members of the LAD's various protected categories. While an award of attorneys' fees may be available to prevailing plaintiffs, punitive damages are not available to persons aggrieved by a violation of the salary history ban.

Employers' Bottom Line: Employers with operations in New Jersey should carefully review their policies and application forms to remove salary history inquiries or include a direction not to answer.

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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