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.