Legislative Update: Washington, New Jersey Join Nationwide Trend of Salary History Ban Laws

This year has seen states enact a litany of laws aimed at addressing pay equity issues, chief among them salary history bans. We previously reported on these issues here, here, and here. Mid-way through 2019, more and more states continue moving full speed ahead with legislation to bar employers from asking about candidates’ prior salary during the hiring process. Since our last report on this topic, the latest newcomers in this area are Washington and New Jersey. These states (like others) have expressly justified these bans based on legislative findings that “[t]he long-held business practice of inquiring about salary history has contributed to persistent earning inequalities” (see H.B. 1696, § 3(a), 66th Leg., Reg. Sess. (Wash. 2019) (enacted)), while courts evaluating such provisions have found that “more is needed” to establish the presumed connection. See Chamber of Commerce for Greater Philadelphia v. City of Philadelphia, 319 F. Supp. 3d 773, 797-98 (E.D. Pa. 2018). Regardless, though, these laws are now on the books and employers should be mindful of their requirements going forward.

On May 9, 2019, Washington passed legislation prohibiting employer inquiries into applicant salary history, which took effect on July 28, 2019. House Bill 1696 amended the state’s 2018 Equal Pay and Opportunities Act to prohibit employers from inquiring about job applicants’ wage or salary history. Similar to California’s Equal Pay Act, which requires that upon an applicant’s request, employers provide applicants with the pay scale (defined as the salary or hourly wage range, excluding bonuses or equity ranges) corresponding to the position sought, Washington’s law requires employers to provide job applicants with “the minimum wage or salary” for the position sought when requested. However, unlike in California, a Washington-based employer is required to provide this information to applicants only after an initial offer of employment, whereas California employers may release this information after an initial interview with the applicant. Additionally, in Washington, if no wage scale or salary range exists, the employer must provide the minimum wage or salary expectation set by the employer prior to posting the position, making a position transfer, or making the promotion. As we previously reported here and here, other state statutes, such as California and Hawaii, do not specify a course of action where no wage scale or salary range exists.

Although the new Washington law prohibits employers from “seeking” a job applicant’s “wage or salary history” directly from the job applicant, or indirectly through the applicant’s current employer, it offers two exceptions: (1) where the applicant has voluntarily disclosed their wage or salary history; or (2) after the employer has negotiated and made an offer of employment to the applicant that includes proposed compensation. Notably, the Washington law allows individuals to bring a private right of action for actual or statutory damages up to $5,000, interest, costs, and attorneys’ fees, in addition to any court-ordered reinstatement and injunctive relief. Washington’s Department of Labor and Industries also has the authority to investigate and enforce such claims.

Just last week, New Jersey enacted similar legislation, but with several important differences. The law, Assembly Bill 1094, is scheduled to take effect January 1, 2020 and follows New Jersey’s 2018 Equal Pay Act. It imposes comparable restrictions to the new Washington law, barring employers from “screening” applicants based on wage, salary, or benefits history. It further prohibits employers from requiring applicants’ salary history to satisfy any minimum or maximum criteria, even if the specific prior salary would otherwise need not be disclosed. The law also bars employers from requiring applicants to provide prior salary, but contains similar exceptions to the new Washington legislation; when an applicant voluntarily discloses prior salary information (unprompted by the employer), employers may verify that salary history and factor the information into salary, benefits, and compensation decisions. In New Jersey, employers must also request that salary history be excluded from any pre-employment background checks, and are barred from retaining or considering the information if it is inadvertently included. Employers who violate New Jersey’s salary history ban face fines of up to $1,000 for a first violation and $10,000 for subsequent violations, but the law does not expressly define what conduct will be considered a single “violation” for purposes of calculating penalties.

One interesting facet of the New Jersey law that differs from other jurisdictions is its approach to employment agencies. The law states that (1) an applicant may reveal salary and compensation history to employment agencies that they use to search for employment; and (2) the employment agency may in turn disclose that information to employers if the applicant provides express written consent. Employers should closely monitor the interpretation of this provision by state courts and the N.J. Commission of Labor and Workforce Development.

The increased popularity of salary history bans around the country unquestionably indicates a nationwide trend. Due to the novelty of these provisions, however, only time will tell the extent of their impact on employers. In the meantime, stay tuned on this blog for further updates on this evolving issue.