Vermont Governor Phil Scott signed legislation on May 11 that will bar employers from asking job candidates about their salary histories during the recruiting process, Littler Mendelson attorney Joseph A. Lazazzero reports at Lexology:
The new law, H. 294, effective July 1, 2018, prohibits asking a prospective, current, or former employee about or seeking information regarding his or her compensation history. For these purposes, compensation includes base compensation, bonuses, benefits, fringe benefits, and equity-based compensation. Under the new law, employers are also prohibited from requiring that a prospective employee’s current or past compensation satisfy minimum or maximum criteria for employment. If an employer discovers a prospective employee’s salary history, the employer may not determine whether to interview the prospective employee based on this information.
Like similar prohibitions in other states, Vermont’s new law still allows employers to confirm a candidate’s past pay if the candidate discloses it voluntarily, as well as to ask about candidates’ salary expectations. When the bill was introduced in the state legislature in January, its sponsors told Vermont Public Radio that it would help close the state’s gender pay gap, which stands at around 16 percent for full-time workers. The original bill also instructed the Vermont Department of Labor to collect new data on gender pay disparities in the state, VPR reported at the time, but this provision does not appear in the final bill signed by Scott last week.
Downtown Philadelphia (OAnderson/Shutterstock)
A federal judge has partly struck down the ban on salary history inquiries passed by the city of Philadelphia last year, ruling that a prohibition against asking candidates about their past earnings infringes employers’ First Amendment right to free speech. However, US District Judge Mitchell S. Goldberg concluded in his ruling, issued Monday, that the city did have a right to bar employers from basing salary offers on that information as a means of combating wage discrimination:
I conclude that the City’s Inquiry Provision violates the First Amendment. Although the Ordinance represents a significant positive attempt to address the wage gap, the First Amendment compels me to enjoin implementation of the Inquiry Provision. The Reliance Provision, however, does not offend the First Amendment and remains intact.
Accordingly, Joseph DiStefano reported at the Philadelphia Inquirer, both the Chamber of Commerce for Greater Philadelphia, which pursued the lawsuit, and the city found something to celebrate in Monday’s ruling. DiStefano gets a local attorney’s take on what it means for employers:
Under Goldberg’s ruling, “employers have to be careful. You can ask for their prior salary. But, once you know the salary, it’s very difficult to ‘unring that bell,’” and claim there was no discrimination, if employees later find they were underpaid relative to others in the same job, [Tracey Diamond, an employment lawyer at Pepper Hamilton LLP,] added.
Paul Brady Photography/Shutterstock
New York State Governor Andrew Cuomo on Tuesday announced the introduction of a bill that would ban all public and private employers who do business in the state from asking job candidates about their prior compensation. The legislation, advanced on Equal Pay Day, coincided with the release of a report (pdf) from the state’s Department of Labor on the status of the gender pay gap in New York and how to close it. Banning salary history questions on job applications is just one of the reports wide-ranging policy recommendations:
This new legislation builds on two executive orders signed by the Governor last year to eliminate the wage gap by prohibiting state entities from evaluating candidates based on wage history and requiring state contractors to disclose data on the gender, race and ethnicity of employees – leveraging taxpayer dollars to drive transparency and advance pay equity statewide. Today’s legislation builds on legislative efforts to address the issue and broadens the scope of Executive Order #161 to encompass all employers, not just state entities, in order to break the cycle of unfair, unequal compensation.
The report found that women in New York earn 89 cents for every dollar earned by men—a narrower pay gap than the national average of around 80 cents to the dollar:
Differences in past salaries are insufficient to justify disparities in pay between male and female employees in the same role, the Ninth US Circuit Court of Appeals ruled on Monday. In an en banc rehearing of a case decided by a three-judge panel nearly a year ago, the court’s 11 judges unanimously ruled in favor of Aileen Rizo, a California school employee who learned in 2012 that her male counterparts were making more than she was and filed a discrimination suit under the Equal Pay Act.
The panel last year, citing a 1982 ruling by the court that said employers could use salary history information as long as they applied it reasonably, had overturned a 2015 decision by US Magistrate Judge Michael Seng, which held that the Fresno, California, school district’s pay structure perpetuates gender-based wage disparities. Monday’s opinion, authored by the late judge Stephen Reinhardt before his death last month, reaffirmed Seng’s ruling, concluding that ” allow employers to capitalize on the persistence of the wage gap and perpetuate that gap ad infinitum—would be contrary to the text and history of the Equal Pay Act, and would vitiate the very purpose for which the Act stands”:
We conclude, unhesitatingly, that “any other factor other than sex” is limited to legitimate, job-related factors such as a prospective employee’s experience, educational background, ability, or prior job performance. It is inconceivable that Congress, in an Act the primary purpose of which was to eliminate long-existing “endemic” sex-based wage disparities, would create an exception for basing new hires’ salaries on those very disparities—disparities that Congress declared are not only related to sex but caused by sex. To accept the County’s argument would be to perpetuate rather than eliminate the pervasive discrimination at which the Act was aimed.
Reinhardt’s opinion will cheer critics of salary histories, who argue that using this information to set pay enables the persistence of unjustifiable gender-based pay gaps throughout an employee’s career.
Last week, Michigan Governor Rick Snyder signed into law a bill preempting local governments within the state from regulating the questions employers are allowed to ask candidates during job interviews. The broad anti-regulatory measure is aimed specifically at restricting local ordinances prohibiting inquiries about candidates’ salary histories, Jackson Lewis attorneys Stacey A. Bastone and K. Joy Chin observe at the firm’s Pay Equity Advisor blog, reinforcing a 2015 law that prohibited local administrations from banning these questions on job applications:
At the time of the bill’s signing, no municipality in the state had proposed an ordinance restricting pre-employment inquiries into salary history. Proponents of the bill contend that asking about an applicant’s past or current salary is a standard business practice and assists employers in budgeting. Opponents argue that soliciting salary history can perpetuate discriminatory pay gaps. …
Wisconsin’s legislature is also poised to pass similar legislation, they note, which Governor Scott Walker is expected to sign. Michigan and Wisconsin here are employing a legislative tactic that has become increasingly common in the past year among states with conservative governments to prevent their more liberal cities from implementing their own, more progressive employment regulations. At the same time, other, more liberal states are pursuing more employee-friendly labor regulations, including higher minimum wages, paid family leave and sick leave mandates, restrictions on the use of non-compete agreements, and even protections for employees who use marijuana in states where the drug has been legalized.
When it comes to salary histories, these midwestern states with Republican governors are going against the prevailing trend. Bans on these inquiries have been passed in California, Delaware, Massachusetts, Oregon, Puerto Rico, New York’s Albany County, New York City, and San Francisco, while 14 other states are considering them.
The practice of basing a new hire’s salary offer partly on what they have earned in the past has become controversial in recent years in light of the theory that this practice may encourage pay inequities to persist throughout an employee’s career. In 2016, Massachusetts became the first US state to bar employers from asking candidates for their salary histories in an amendment to its equal pay law, and other states have followed suit, including California, Delaware, and Oregon, as well as New York City.
Despite the proliferation of these bans, a recent survey from WorldatWork finds that most employers are still using salary histories as a factor in their pay negotiation process in locations where they are still permitted to do so. While 37 percent of employees surveyed said they had prohibited the practice in all their US locations, 35 percent said they did so only in areas where state and local bans exist and 27 percent said they do not operate in any of these areas.
Smaller organizations were the least likely to ban the use of salary histories nationwide, WorldatWork found, with just 25 percent of organizations with under 500 employees saying they did (49 percent said they did not operate in any locales with statutory bans). Large organizations, in contrast, have done so at greater rates: 46 percent of organizations with 10,000 employees or more said they had stopped using salary histories nationwide, while 37 percent said they had dropped them in jurisdictions where bans are now place.
New Jersey’s state legislature on Monday passed what supporters are calling the strongest pay equity legislation yet enacted by any state in the US, NorthJersey.com’s Catherine Carrera and Nicholas Pugliese report:
The bill passed Monday, A-1, would allow victims of discrimination to recoup up to six years’ worth of back pay, up from two under current law. Damages that are proved could be tripled, and the bill would permit lawsuits not just by women but by any group covered under the state’s Law Against Discrimination, such as racial or sexual minorities.
It would also give employees a better chance at prevailing in pay discrimination cases, said Andrea Johnson, senior council for state policy at the National Women’s Law Center. Workers would have to prove they are being paid unfairly for “substantially similar” work, a change from the existing standard of “equal pay for equal work.”
“There are a lot of courts that have interpreted equal work in a very narrow way to mean basically identical work,” Johnson said. “So there’s some language added to the law just to make sure that courts are doing a deeper analysis into the justification. We see too many cases thrown out for reasons that actually might be sex-based.”
The Diane B. Allen Equal Pay Act, named after a recently retired Republican state senator who experienced age and gender discrimination during her career in broadcast journalism, passed the state Senate unanimously and the Assembly 74–2, with two Morris County Republicans voting against it. Assemblymen Michael Patrick Carroll, one of the two “no” votes, said it would lead to endless litigation.