Ask the BPHR Advisor: Salary Ban

Ask the BPHR Advisor: Salary Ban 600 600 Balance Point Team

BPHR’s Director Lisa Salcido, SPHR, SHRM-SCP provides answers to your pressing HR questions.

Question: What do hiring managers need to know about the new salary history ban?

Answer: Several cities and states have banned employers from screening job candidates based on the applicant’s prior compensation, which includes all wages and benefits. Some lawmakers believe that relying on prior pay to determine job offers has discriminated against those who have traditionally been paid lower, such as women and minorities. Thus perpetuating a cycle of low wages and contributing to pay inequity.

A new law effective January 1, 2020, prohibits private employers in New Jersey from asking candidates about their pay and benefits history or making hiring decisions based on previous salary. 

New Jersey’s law restricts employers from inquiring about salary history from a candidate at any stage in the hiring process, including asking the current or any former employer through a background or reference check, or searching public records for salary data.

In New Jersey, employers who violate the law can be fined up to $1,000 for a first offense, $5,000 for a second offense, and $10,000 for violations thereafter.

Effective January 6, 2020 New York State also has a new law restricting salary history inquires and imposes additional restrictions to the previously enacted New York City pay history ban. 

New York’s law restricts employers from requesting pay history from an applicant, or their current or former employer, in order to prevent employers from relying on an applicant’s pay history to determine pay or whether to offer employment.

In New York, employers who violate the law can be fined, owe damages to applicants and be subject to training mandates.

Here is what those recruiting and hiring in states with pay inquiry bans should do:

  • Review job applications (paper versions and online portals) and remove any pay history questions.
  • Research compensation data by industry, position and location to determine the market value for your open positions.
  • Make sure everyone involved in the recruiting process is trained on the new restrictions.
  • Ask “What are your salary expectations?” as a legal alternative.

The laws allow candidates to disclose their compensation histories as long as it is voluntary and not prompted or coerced.

Take a More Balanced Approach to HR

Maintain compliance with the trickiest of laws. Schedule your free phone consultation today to learn how your organization can benefit from our services.

Have a question for Lisa? Email her directly.

DISCLAIMER: The material presented on this page is for informational purposes only and does not constitute legal advice or legal opinion. 

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