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Employment Law Notebook

New Jersey Employers Will No Longer Be Able to Screen Job Applicants Based on Salary History

Acting New Jersey Governor Sheila Oliver signed a new law yesterday that will prohibit employers from screening job applicants about salary and wage history before the employer makes a hiring decision.  The law aims to focus the job screening process on an applicant’s skills, qualifications, and experience, and to stop prospective employers from offering lower salaries to applicants based on how they were paid in the past.

This new law, which goes into effect on January 1, 2020, prohibits employers from: asking or requiring job applicants to provide information regarding their prior wages, salary or benefits; requiring that an applicant’s prior salary meet a maximum or minimum criteria; and making any employment decisions based on an applicant refusing to provide such information.  

There are, however, some notable exceptions to the new law:

  • After making a job offer to the applicant that includes the overall compensation package, the employer is allowed to ask the applicant to provide the employer with written authorization to confirm salary history, including but not limited to the applicant’s compensation and benefits.

 

  • If an applicant is applying for a job that will provide commission or some other incentive as part of the total compensation, the employer is permitted to ask the applicant about their prior experience with commission and incentive plans but is not permitted to ask the applicant about the earnings the applicant received from the plan.

 

  •  If an applicant voluntarily provides the employer with their salary history, the employer can verify the applicant’s salary history and consider it when deciding what salary benefits and other compensation to offer the applicant.

 

  • If the employer seeks job applicants, employs individuals or does business in at least one other state besides New Jersey, the employer is permitted to ask out of state candidates to provide their salary history on a job application if doing so is permissible in that state.  If the employer uses the same job application for candidates in New Jersey the employer will have to provide a notice on the application instructing New Jersey applicants not to provide salary history information.

 

  •   If an applicant uses an employment agency to search for a job, the applicant can provide their salary history information to the agency, but the agency will be prohibited from sharing it with the employer unless the applicant provides written consent to do so.

 

  • If a federal law or regulation requires the employer to verify or disclose salary history of employees or requires knowledge of salary history to determine employee compensation, the employer can take all actions to comply with such law or regulation.

Remedies:

Under the new law, an employer will face penalties from the New Jersey Department of Labor ranging from $1,000 to $10,000 depending on the number violations. Additionally, if the applicant is a member of a protected class as defined under the New Jersey Law Against Discrimination (“NJLAD”), and the employer violates the restrictions on salary history inquiries, the applicant will also have a clam under the NJLAD.  Although the new law does not clearly state how such damages would be calculated on such a claim, they could include economic and emotional distress damages.  The law does clearly state that damages on such a claim would not include punitive damages or attorneys’ fees.

Steps Employers Need to Take to Prepare for the New Law:

Employers must prepare to comply with the law, which becomes effective in January.  All employers using job applications that request salary history must revise such forms for New Jersey applicants with the new required notice that New Jersey applicants are not to provide such information. Additionally, employers should instruct all managers, human resource professionals and outside recruiters/employment agencies involved in screening interviewing and hiring decisions about the prohibited salary/benefit history inquiries.  Finally, the law requires employers that conduct background checks on job applicants before making a job offer to specify on the background check forms that salary history is not to be disclosed.  If, however an employer does not conduct a background check until after making a job offer (with full compensation information), the employer should include language on the consent form that states that the subject of the background check gives permission to the employer to obtain salary history information.  

Given the complexities of the new law, employers are advised to consult employment law counsel to get more information on the new law and how it applies to their unique circumstances. Meyers Fried-Grodin LLP’s attorneys are available to assist employers with complying with the new law.

  

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