Laws are being adopted by jurisdictions across the country that prohibit employers from asking applicants for their salary histories and it is a trend that all employers need to know about.
Because women historically have been paid less than men, basing a wage offer on a female applicant’s salary history is seen as freezing in place long-standing gender pay disparities, advocates hold.
No law at the federal level bans salary history inquiries, although a bill is pending in Congress. However, other laws at the federal and state level mandate equal pay for women. “It seems fairly simple: Do the same work, get the same pay,” notes Laura Lawless, a partner in the law firm of Squire Patton Boggs.
At least one federal law even seemed to encourage discrimination based on a woman’s pay history. The 1963 Equal Pay Act, which prohibits employers from paying men and women unequally, even seemed to encourage the practice until recently.
Exceptions in the Equal Pay Act allow different rates of pay for men and women based on seniority; merit; the quantity or quality of the employee’s work; or “any other factor other than sex.” Employers had been able to defend unequal rates of pay based on the woman’s salary history by citing it as a factor other than sex. But in recent years, more federal appeals courts have held that this can no longer be used as a defense.
Employers must remain mindful that 18 states and 21 municipalities to various degrees ban employers from seeking salary histories. Bans have also been proposed in Arizona, Florida, Idaho, Montana, South Carolina and West Virginia, among other places.
This patchwork of laws nationwide poses a compliance challenge for employers, explain attorneys Tyler Runge and Amy Patton of the Payne & Fears law firm. While Alabama prohibits retaliating against an applicant who refuses to provide wage history, it doesn’t prohibit an employer from seeking that information. Other states like Illinois completely prohibit employers from seeking or relying on salary history.
On the other hand, Michigan and Wisconsin passed laws in 2018 prohibiting local governments from restricting an employer’s ability to ask for salary history. Lawsuits also have challenged the constitutionality of some of these bans, charging that they are a violation of free speech. Federal courts have struck down Philadelphia’s ban on this basis. Don’t expect this to slow down the movement pushing adoption of such bans, warn Runge and Patton. “Though there are outlier states and pending legal challenges, all signs point to a continued spread of salary history bans.”
They urge employers to make sure they are not soliciting the wrong information. For example, in New York City, boilerplate disclaimers on multi-state applications stating that certain applicants should not answer a salary history question are insufficient to avoid liability. The State of New York also recently issued guidance prohibiting employers from posing “optional” salary history questions.
Also make sure that those who are involved in screening applicants, including third-party recruiters or investigators and screening services, are complying with the various laws. Several jurisdictions, including Delaware, Illinois, Kansas City (MO), New Jersey, Albany County (NY), and Oregon, specifically forbid employers from “screening” applicants based on their compensation histories.
Compliance does not stop at the interview, Runge and Patton observe. “More and more states are prohibiting even thinking about salary history in deciding on a job or salary offer. Decision-makers long-accustomed to factoring salary history into their hiring process may need training on this. As the saying goes, old habits die hard.”
The fundamental decision for employers is whether they believe it makes more sense to adopt a uniform policy eliminating salary history questions, or try to stay current and maintain separate policies for different locations.
