Delaware Compensation History Ban: Another State Making A Pronouncement About Pay Equity

With another Labor Day approaching, employers are once again thinking about the many tasks that need to be completed before year end. Let’s add one more – remembering to add Delaware to the list of jurisdictions prohibiting employers from asking applicants’ compensation history pre-offer.  The synopsis of the law states that when an employer affirmatively asks about pay history, it perpetuates gender disparities from one job to another.

Delaware’s compensation history ban goes into effect in December 2017. At the pre-offer stage, employers are not permitted to inquire about an applicant’s “compensation,” which includes salary as well as benefits and other forms of compensation.  Once an offer is extended and accepted, then a Delaware employer can obtain such information for the sole purpose only of confirming the applicant’s compensation history. (Note the term compensation is much broader than just “salary.”)

The law, similar to other compensation history bans, does not preclude the applicant’s voluntary disclosure of compensation during the interview process. Rather, the employer, at all times during the interview process, cannot affirmatively seek compensation history during discussions and any negotiations.  What if an applicant uses an outside recruiter?  Answer: The same “compensation history ban” rules apply.  While there may be a discussion or negotiation about compensation expectations with the employer or employer’s agent, the applicant cannot be required to disclose compensation history.  Employers should be pro-active and provide their outside recruiters and any other “agents” who may assist in the screening process with clear notice of this law’s requirements.  Delaware law, however, provides an avenue for employers to avoid liability for the actions of their agents who seek compensation history from applicants pre-offer if they can demonstrate that their agents were informed of the compensation ban requirements and advised to comply with the ban.

The Delaware Department of Labor enforces the salary ban law. Civil penalties can be steep, with $1,000-5,000 for the first offense, and not less than $5,000 nor more than $10,000 for each subsequent violation. While the authors recently were told that typically the State Department of Labor attempts to give warnings first before imposing civil penalties as a way to educate employers about new laws, employers should be aware that any actions by the employer or employer’s agent relating to screening an applicant based on his or her compensation history or inquiring about compensation history can be considered a “single” violation.

The take aways from Delaware’s law are:  1) clear notice should be provided to employer’s agent as described above to avoid liability under the compensation ban law; and 2) the employer should take steps by the law’s effective date to make sure any discussions about compensation history are not affirmatively engaged in by employer pre-offer, including asking such information on an application form.

Illinois Next to Prohibit Salary History Inquiries?

The Illinois state legislature passed House Bill (HB) 2462 which would prevent employers from inquiring about a job applicant’s salary history and lower the burden on employees claiming equal pay violations. The Bill now awaits Governor Bruce Rauner’s signature.

HB 2462, which seeks to amend the Illinois Equal Pay Act of 2003, prohibits employers from: (i) screening job applicants based on their wage or salary history, (ii) requiring that an applicant’s prior wages satisfy minimum or maximum criteria, (iii) requesting or requiring as a condition of being interviewed or as a condition of continuing to be considered for an offer of employment that an applicant disclose prior wages or salary; and (iv) requiring an employee to sign a contract or waiver that would prohibit the employee from disclosing or discussing information about the employee’s wages. Employers also would be prohibited from seeking salary, including benefits or other compensation or salary history, of a job applicant from any current or former employer. HB2462 also lowers the burden on employees claiming equal pay violations by replacing the requirement that an employee prove that the jobs being performed require “equal skill, effort, and responsibility” with a “substantially similar” standard.

Illinois HB 2462 is one of a growing number of state and local jurisdictions to attempt to close the pay gap by restricting employers from obtaining salary history information or using that information to set salary. Delaware, Massachusetts, New York City, Oregon, PhiladelphiaPuerto Rico and San Francisco have passed similar laws, and a number of other jurisdictions, including California, North Carolina, and Pennsylvania, have proposed similar bills.

With no slowdown of this trend in sight, employers should review their employment application forms and hiring and pay practices and begin to educate recruiters and managers on how to comply with pay history prohibitions. Illinois employers also should review any confidentiality agreements that they may use to ensure the language of those agreements cannot be interpreted to prohibit an employee from discussing his or her wages.

Jackson Lewis’s Pay Equity Resource Group attorneys are available to provide strategic guidance. Stay tuned for updates.

San Francisco Joins the Salary History Inquiry “Ban” Wagon

The City of San Francisco (SF) is the latest governmental entity to join the trend towards prohibiting employers from asking job seekers about current or prior salary or wage rate or pegging starting pay to prior pay.  The SF Ordinance is based on the following premise:

The problematic practices of seeking salary history from job applicants and relying on their current or past salaries to set employees’ pay rates contribute to the gender wage gap by perpetuating wage inequalities across the occupational spectrum… In effect, to the extent employers consider applicants’ salary history in setting salaries of new hires, historical patterns of gender bias and discrimination repeat themselves, causing women to continue earning less than their male counterparts and less than they would have earned but for their gender.

While not every employer or social scientist agrees with this statement, New York City, Philadelphia, Delaware and Oregon have passed similar laws.  The State of California also appears poised to pass such a law with A.B. 168 pending in the California Senate.

Each of these laws is subtly different and the parameters of the laws remain to be determined. For example, the SF Ordinance defines “inquire” to mean “any direct or indirect statement, question, prompting or other communication, orally or in writing, personally or through an agent, to gather information from or about an Applicant, using any mode of communication, including but not limited to application forms and interviews.”

The SF Ordinance also broadly provides, “An Employer shall not consider or rely on an applicant’s Salary History as a factor in determining whether to offer Employment to an Applicant or what Salary to offer an Applicant.”

Other Notable Provisions

In addition, the SF Ordinance:

  • Prohibits employers from releasing salary history information for any current or former employee to a prospective employer without written consent, unless required by law;
  • Allows an applicant to voluntarily “and without prompting” disclose prior salary, in which case the employer may consider the prior salary but may not peg the applicant’s salary based solely on prior salary or justify paying the applicant differently than other employees doing substantially similar work;
  • Permits employers to discuss a job applicant’s salary expectations without inquiring about salary history.

The Take-Away

As salary history inquiry laws continue to proliferate, employers in all jurisdictions should review their pay practices and determine whether and to what extent their organizations rely on prior salary to set starting pay and how prior salary factors, if at all, into the employer’s system for determining and defending pay.

New Jersey Governor Chris Christie Vetoes Wage History Legislation

New Jersey Governor Chris Christie has vetoed legislation that would have prohibited employers from requesting salary history information from prospective employees. As previously reported, the prohibition would have been enacted through amendments to the New Jersey Law Against Discrimination.  In vetoing the bill, Governor Christie reaffirmed his commitment to ending wage discrimination but felt the law, as written, was too broad and “would punish, as discriminatory, otherwise innocuous conduct done with neither discriminatory intent nor a discriminatory impact.”

State Assembly member Joann Downey (D-Monmouth), who authored the bill, reportedly decried Governor Christie’s veto as “an insult to New Jersey women and an insult to middle class families who are suffering because of lost wages caused by the gender wage gap.”

This is not the first time Governor Christie has vetoed legislation aimed at remedying pay discrimination. Governor Christie previously vetoed a bill that would have expanded wage protections, including requiring equal pay for “substantially similar work.”

Stay tuned to the Jackson Lewis Pay Equity Advisor blog for updates on new and pending legislation.

Will New Jersey Be Next to Jump on the (Wage History) “Ban” Wagon?

New Jersey is moving closer to enacting a law that would prohibit employers from inquiring about applicants’ salary histories. The bill, passed in the Democratic-controlled state Assembly and now the state Senate, is one of several similar bills that have passed or are being considered across the country.  Governor Chris Christie now will decide whether to sign the bill into law.

The proposed legislation would amend New Jersey’s Law Against Discrimination to prohibit employers from (1) screening a job applicant based on the applicant’s wage history, including by requiring that an applicant’s prior wages, salaries or benefits satisfy any minimum or maximum criteria, or (2) relying on an applicant’s salary to determine a salary amount for the applicant at any stage in the hiring process, including finalizing an employment contract. Employers also would be prohibited from asking about the salary history, including compensation and benefits, of a job applicant.  However, an employer may seek the salary history if the prospective employee voluntarily, without employer coercion, provides the employer with written authorization to do so.

Delaware, Massachusetts, New York City, Oregon, Philadelphia, and Puerto Rico have passed similar laws, and a number of other jurisdictions, including California, Illinois, North Carolina, Pennsylvania, and San Francisco, have proposed similar bills.

As these types of laws are introduced and passed across the country, employers should review their employment application forms and hiring processes to ensure compliance with the new laws. Stay tuned to the Jackson Lewis Pay Equity Advisor blog for updates on new and pending legislation.

New York State Releases Draft Compensation Reporting Documents for State Contractors

In January, New York Governor Andrew Cuomo signed Executive Order 162, which requires most state contractors and subcontractors to disclose employee job title and salary data, in addition to the equal employment opportunity information (such as sex, race, and ethnicity) already required.  With the Executive Order that took effect on July 1, 2017, the New York State Division of Minority and Women’s Business Development released draft guidelines and supporting materials detailing state contractor requirements.  New York State solicited public comments to the draft documents and those public comments are now under review.

The draft guidelines provide clarity on many issues, including who must report, what reports must be filed, the compensation information to be reported, when to report, and how to file.  Employers can also review a Frequently Asked Questions document, which covers how the state will use the data, as well as the confidentiality of the data submitted.

Workforce Utilization Form (EEO-1)

The state released a sample Workforce Utilization Form that contractors will use to report on employee job title and salary data. Notably, the form requests information regarding the total number of employees within each job title, the number of hours worked, and total compensation, broken down by minority groups and gender.

Per the draft guidance, the compensation reported should be exclusive to the state contract, not compensation paid to contractors for work outside the state contract. The draft guidance also states that contractors need only execute the Workforce Utilization for contracts entered into on or after June 1, 2017, with the first reports due after January 1, 2018.  The guidance specifies that most state agencies and authorities will require that contractors submit reports within seven to ten days following the end of each monthly (for construction contracts) or quarterly (for commodities and services contracts) reporting period.

Implications for Employers

Employers can do several things to prepare for the New York State reporting requirements. First, employers should review the proposed Workforce Utilization Form, guidance documents, and frequently asked questions.

Employers who are entering into state contracts on or after June 1, 2017, should review their systems to ensure they can track all information required, including which employees are working on state contracts as well as the amount of time the employees spend working on those state contracts.

Employers also should remain current on other state laws aimed to close the pay gap, which may impose similar reporting requirements. Jackson Lewis will keep you informed on significant changes to pay equity laws forthcoming.  Please contact us with any questions.

Business Group Files Amended Complaint in Lawsuit Challenging Philadelphia Wage History Law

Philadelphia’s Wage History Ordinance, initially scheduled to take effect on May 23, 2017, remains on hold. The Ordinance has been subject to a federal court stay pending resolution of a lawsuit for a preliminary injunction brought by the Chamber of Commerce for Greater Philadelphia. The City of Philadelphia agreed to halt enforcement of the Ordinance pending the litigation’s outcome. Following a motion to dismiss filed by the City, the court dismissed the lawsuit on May 30. Thereafter, on June 13, the Chamber filed an amended complaint. Click here to read the full article on this development and its implications for employers.

Oregon Enacts Expansive Pay Equity Law

The Oregon Equal Pay Act of 2017 greatly extends pay equity protections to a variety of protected classes, prohibits employers from asking for applicants’ salary history, and expands existing remedies available to employees. House Bill 2005 also offers key protections and a safe harbor for employers. Click here to read the full article on this development and its implications for employers.

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