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New Laws Prevent Prospective Employers From Asking About Salary History

Employers may soon not be able to ask salary histories as a part of the equal pay movement.

The Commonwealth of Massachusetts, The City of New York, The City of Philadelphia, and the Commonwealth of Puerto Rico (so far) have recently enacted legislation to limit the ability of potential and current employers to ask questions about a prospective employee’s salary history, or to use that history in employee evaluations.

The so-called “salary history bills” are a part of the equal pay for equal work movement, which flows from a position that women are paid less than men for the same work. Most statistical studies back that supposition up, but they do vary in their findings.

According to the National Women’s Law Center, “American women who work full time, year-round are paid only 80 cents for every dollar paid to men — and for women of color, the wage gap is even larger.” The Pew Research Center noted in July 2016 that “racial, gender wage gaps persist despite some progress in U.S,” and pegged the differential at 83%. A report by PayScale, an online salary, benefits and compensation information company, sets the percentage at 97%.

Although still more studies dispute the percentage of the gap, virtually all of them acknowledge some kind of gap. Other studies discuss the gap in terms of job function, with analyses that minimize the actual pay gap for that reason.

Whatever the view, nearly all studies conclude that there is some wage gap between men and women, and that one factor, among others, that allows this inequity to continue is salary history, both from previous jobs and for evaluation for advancement within a company.

The City of Philadelphia noted that “since women are paid on average lower wages than men, basing wages upon a worker’s wage at a previous job only serves to perpetuate gender wage inequalities….”

Although Philadelphia did pass salary history legislation, that law is currently on hold because of objections filed in federal court by the Chamber of Commerce for Greater Philadelphia.

Laws Currently in Effect

The federal Equal Pay Act passed in 1963 as a part of President John F. Kennedy’s “New Frontier,” and is currently codified in 29 USC 206 (d). That code section does not include salary history restrictions.[1]

Effective dates

The salary history statute in Massachusetts will be effective in 2018 as an expansion of existing equal pay laws that date from 1948.[2] The Puerto Rico statute was effective March 8, 2017.[3] The New York City statute will be effective in October 2017.[4] Again, the Philadelphia law is on hold.[5]

Those statutes contain mostly the same language, with some differences.

To begin with, the prohibition against salary history requests are not absolute under these laws. There are some limited exceptions. To begin with, any employee or potential employee can volunteer his or her salary history. The New York language is “unprompted and willing” disclosure.

The New York law has exceptions for employees of the City, employees subject to a collective bargaining agreement, and internal company employee evaluations. Other statutes do not have those exceptions.

Most of the laws exclude bona fide merit and seniority systems from equal pay restrictions.

Next, in looking at these laws, the threshold question would be: “what jobs do they apply to—or, how do you equate jobs?” In answering this question, the Puerto Rico language, for example, is instructive, stating that the law applies to jobs that require “substantially similar skill, effort and responsibility performed under similar working conditions.”

Massachusetts language refers to an equal job as one where work is “substantially similar in that it requires substantially similar skill, effort and responsibility and is performed under similar working conditions."

The New York City law prohibits an employer, employment agency, employee or agent from: inquiring about the salary history of a job applicant or relying on the salary history of a job applicant when determining his or her salary amount at any stage in the employment process, including when negotiating a contract.

Under the same law, “salary history” is defined as including the applicant's current or prior wage, benefits or other compensation. It does not include any objective measure of the applicant's productivity, such as revenue, sale, or other production reports.

The Massachusetts act additionally includes language prohibiting any conversation about salary in the workplace, and provides whistleblower protections.

All of the laws cited give the employee or potential employee the ability to bring an immediate civil action against the employer. On the other end of time limits, Massachusetts has a three-year statute of limitations to bring an action.

Specific language

The Puerto Rico statute’s language is instructive, both because it is expansive and detailed, and because it is now the law. This language may very well become the basis of other salary history statutes going forward but, if not, it is a prime example of how these statutes may be written.

The Puerto Rico statute defines unlawful salary history requests as:

1. asking an applicant, or his or her current or past employer, about the applicant’s salary history, unless the applicant voluntarily provides such information or the potential employer and applicant have already negotiated a salary and an offer of employment has been made, in which case the potential employer may inquire or confirm the potential employee’s salary history;

2. prohibiting an employee or applicant from asking, discussing, soliciting, or divulging information about his or her salary or the salary of another employee who performs a comparable job (with very narrow exceptions for human resources, supervisory, and managerial personnel, and other employees with permitted access to employee compensation data); and

3. terminating, threatening, discriminating, or otherwise retaliating against an employee in relation to his or his terms, conditions, compensation, location, benefits, or privileges of employment because the employee: (i) divulged his or her salary or asked about or discussed the salary of other employees; (ii) objected to any act or practice that has been declared illegal by the act; (iii) filed a complaint pursuant to the act; or (iv) offered or intended to offer, verbally or in writing, any testimony, expression, or information as part of an investigation against his or her employer due to violations of the act.

The Future of Salary History Laws

A number of other states are also reportedly considering passing salary history prohibitions, including Illinois, Maine, Maryland, New Jersey, New York (the state following the city), Pennsylvania, Rhode Island, and Vermont. Further, an equal pay attempt in Connecticut has struck salary history language from its gender equality bill.

As a side note, one major British law firm, Allen & Ovary, eliminated salary history from its internal employment review process last year, to positive feedback from its lawyers, and especially its female legal staff.

Into the future

While it is currently difficult to say if this is going to be a national trend that may spread from locality to locality, Congresswoman Eleanor Holmes Norton (Dem.-DC) introduced H.R. 6030: Pay Equity for All Act (introduced and referred to committee on 9/14/16), an equal pay statute that includes a prohibition against asking about previous salaries. That statute never made it out of committee, but may serve as a template for similar local or federal legislation as time goes on.

Summary of current law

“Salary history” is a new area, or, really, sub-area of equal pay law and, as such is in a state of flux. Four U.S. jurisdictions have some kind of limit on the ability of employers or potential employers to ask applicants about their salary history. At least eight more are considering such legislation.

However, it must be said that the current political climate may make expanding this area of law questionable in the near term, as shown by proposed federal legislation that went to committee last year and never came back.

This is definitely an area of law worth keeping an eye on in the near future.

[1] Equal Pay Act of 1963 (Pub. L. 88-38) (EPA), as amended, Volume 29 of the United States Code, Section 206(d).

[2] New law: Year 2016, Chapter 177, Massachusetts Session Laws. The basic equal pay statute in Massachusetts is Section1, Chapter 149 of the General Laws of the Commonwealth of Massachusetts.

[3] The Equal Pay Act of Puerto Rico, Law No. 16-2017

[4] City of New York Int. No. 1253-A

[5] Amending Title 9 of The Philadelphia Code, entitled "Regulation of Businesses, Trades and Professions," by adding a new Chapter on wage equity prohibiting employers from inquiring about salary history, including definitions, duties, penalties, posting requirements, a private right of action and other related items regarding wage equity; all under certain terms and conditions.