Just like the “Ban the Box” movement a new bill is being passed in several cities and states that ban employers from asking job applicants about previous wages earned. The New York law signed by City Mayor Bill de Blasio on May 4th will prohibit employers from asking a job applicant about their salary history or “relying on salary history to determine the applicant’s compensation unless the applicant voluntarily offer the information”. The term “Salary History” broadly refers to the applicant’s wage rate history as well as any benefits or other compensation the applicant may have received. The new law takes effect on October 30th.
This will affect employers that conduct current/previous employment verification as part of the employment background check. When conducting an employment verification employers/background screening companies will verify among dates and position what the applicant earned or their total compensation. This new law will prohibit employers from verifying wage earned. There are a couple exceptions, if the applicant provided compensation history voluntarily and employers may also ask the applicant what their salary expectation is.
The fine employers may face if they violate this law is $125,000 for an unintentional violation, and up to $250,000 for a willful, wanton, or malicious act. This legislation follows similar efforts in other jurisdictions to combat gender-based pay disparities. Philadelphia passed legislation prohibiting employers from inquiring about salary history during the hiring process, as does the state of Massachusetts (takes effect in July 2018).
Employers should review their hiring practices and procedures to ensure compliance with the law. Removal of the question asking for previous wages earned on a job application or background screening report. Mandatory training of any HR professional or hiring manager on the law is crucial.