New in 2020: New Jersey Enacts Salary History Ban

One of the strongest trends noted over the past year has been the growing number of states and local governments enacting legislation that prevents employers from seeking the salary history of job candidates.

Joining the slew of wage history bans recently put into place, New Jersey’s private employers will also have to comply with a salary history ban in 2020.

The Garden State law forbids private employers from asking about or even considering a worker’s wage and salary experience, making it — along with the New York salary history ban — one of the more stringent salary bans. The law went into effect on Jan. 1, 2020.

State employers in New Jersey have been operating under a salary ban since early 2018. Local governments and private employers were not affected by that prohibition.

The private employer salary history ban law was signed by Lt. Gov. Sheila Oliver on July 25, 2019. She signed the legislation because Gov. Phil Murphy was out of the country on vacation.

Salary history bans are aimed at creating pay equity between the salaries of men, women, and minorities. Women in New Jersey are paid 82 cents for every $1 paid to men, according to the National Partnership for Women and Families.

Supporters of the measures say salary history questions perpetuate wage discrimination against women and minorities who reportedly are paid less starting with their first job. Proponents say the compensation gap is continued in successive jobs because previous wage information is taken into account when a new offer of compensation is made.

Seventeen states and 19 localities have some type of salary history ban in place. Several bans were put into place in the past year including Alabama, Cincinnati, Colorado, Kansas City, Missouri, New York, Maine, and Washington state.

What does the New Jersey salary history ban do?

The law forbids employers from screening job applicants based on their previous wage, salary, or benefits or from requiring that an applicant’s salary history satisfies a minimum or maximum criteria.

Exceptions of New Jersey salary history ban 

However, there are several situations in which an employer may consider salary history such as:

• If the applicant voluntarily, “without prompting or coercion,” provides the information
• The employer may ask an applicant to provide written authorization to confirm salary history after the employer has made a job offer that includes the applicant’s compensation and benefits

Language in the law expressly notes that it does not apply to:

• Internal transfers or promotions
• Previous knowledge gained by the employer as a result of prior employment with the employer
• An employer acting under a federal law or regulation that requires the disclosure or verification of salary history for employment or that requires knowledge of salary history to determine an employee’s compensation

In addition, employers are allowed to discuss the “terms and conditions” of incentive and compensation plans the applicant was entitled to at a previous employer, provided that: (1) the employer does not ask about the specific dollar amounts involved in the plans and (2) the job the applicant applied for with the prospective employer includes an incentive or commission component.

Background checks

When conducting a background check on the applicant, the employer must specify that salary history information is not to be disclosed. If, despite that stipulation, salary history is disclosed, the employer is not allowed to keep that information or consider it when determining salary, benefits, or other compensation for the applicant.

Similarly, the law does not forbid an employer from acquiring salary history information that is publicly available, however, an employer may not “retain or consider” that information when determining the compensation package to be offered to the applicant.

Employment applications

Employers that do business in multiple states can include a salary history inquiry on their employment application, so long as the application states that applicants who will be working in New Jersey or mostly working in New Jersey do not have to answer the question.

Employment agencies

One of the ways in which New Jersey’s salary history ban differs from those approved by other jurisdictions is in how it treats employment agencies. While most employment agencies are included in salary history bans, under the New Jersey wage history ban, if a job applicant contacts an employment agency for help with their job search, the applicant is allowed to provide salary history, including experience with incentive or commission plans, but the employment agency is not allowed to share that information with potential employers without the express written consent of the applicant.

No retaliation

An applicant’s refusal to volunteer compensation information is not to be considered in any employment decisions.

Penalties

Employers face civil penalties of up to $1,000 for a first offense, $5,000 for a second, and $10,000 for any further violations. The law also provides a private right of action.

Opposition

A previous attempt to enact a salary history ban was vetoed by Republican Gov. Chris Christie in 2017. Christie reportedly said that “while discrimination has absolutely no place in our modern workforce or in our state,” the bill he vetoed “would punish, as discriminatory, otherwise innocuous conduct done with neither discriminatory intent nor a discriminatory impact.”

State employer salary history ban

New Jersey’s state employers have been under a salary history ban since Feb. 1, 2018. It prohibits state entities from inquiring into a job applicant’s current or previous salaries until the organization has made a conditional offer of employment and provided its compensation package. The law also prevents employers from searching public records databases to discover an applicant’s salary history and requires the employer to take all reasonable measures to avoid inadvertently discovering a potential employee’s salary history.

The prohibition came via an executive order signed by Democratic Gov. Phil Murphy’s on his first day in office. At the time it was put into place, Murphy said the measure was aimed at reducing the gender pay gap.

New Jersey equal pay act

The salary history ban also comes a year after New Jersey’s passage of the New Jersey Equal Pay Act, which forbids an employer from paying an employee who is a member of a legally protected class less than other employees with similar job duties, unless the employer has a legitimate business reason for the pay difference.

Legal experts say the salary history ban addresses a gap in the state’s Equal Pay Act where the law does not clearly address whether employer inquiries into a prospective employee’s compensation or benefits are allowed.