Over the past few years, a growing number of states and cities have banned the practice of using salary history to screen potential new employees. If you’re an employer in New Jersey, you’re now included in that trend.
Starting in 2020, it’s not a good idea for New Jersey employers to ask job applicants how much they made. The Garden State is now one of 17 states and multiple cities to outlaw pay history questions. While similar in many aspects, New Jersey’s version of the law does have some key differences that can help employers avoid potential penalties.
The Impacts of New Jersey’s Salary History Ban
As with other states with salary history bans in place, Bill A1094 prohibits New Jersey employers from using past wages, benefits, and other salary history-related information to vet potential job applicants. The law also prevents employers from requiring an applicant’s salary history to satisfy any minimum or maximum criteria.
If by chance an employer breaks the rules set in Bill A1094, the law has set penalties in place. Any employers who violate salary history ban are subject to civil penalties. These penalties scale based on the number of times an employer breaks the rules:
- Up to $1,000 for the first violation
- $5,000 for the second violation
- $10,000 for each subsequent violation
Unlike other state and city bans on salary history inquiries, there are a few exceptions where employers are protected in New Jersey. The state’s ban includes a couple of examples of expressly permitted activities where the employer would not be in violation of the law.
The law does not penalize employers if applicants voluntarily provide their salary history. Of course, this disclosure must be done by an applicant’s choice alone – it cannot be prompted or coerced at all. If this information is provided, the employer may then verify that the information provided is accurate and use it to determine compensation.
If an employer makes an offer of employment to an applicant that includes an explanation of the overall compensation package, the employer may request that the applicant provide a written authorization to confirm their salary history. If the authorization is given, this information can include both compensation and benefits.
Hiring internal or past employees
The law does not extend to any internal applicants with regards to promotions or transfers. As such, employers may consider salary information for applicants who already work at their company. In addition, employers may consider past salary history information if an applicant used to work for them, but only the information that they already have on file.
Federal law exclusions
If a federal law requires an applicant to disclose their salary history (or requires an employer to verify that history), an employer will not be penalized for collecting and using that information.
Incentive or commission plans
If an applicant is applying for a position with commission or incentive-based compensation components, an employer may inquire about past incentive and commission terms. However, these inquiries cannot extend to what the applicant’s earnings were under a previous employer’s plans.
Collective bargaining agreements
Employers may communicate with applicants about wages or salary rates if the job has certain salary guidelines set by collective bargaining agreements or laws.
Evaluate Your Hiring Process to Protect Your Business
While the salary history ban is a more recent law, it’s not the only regulation that employers need to consider during the hiring process. There are a variety of illegal interview questions that are off-limits for employers, such as inquiries about national origin and pregnancy status. As such, it’s important for employers to take the following steps to examine their internal processes to prevent possible violations.
- Evaluate job applications, recruiter instructions, and background-check instructions to eliminate improper information requests
- Examine interview templates or guidelines (and establish them if they do not already exist)
- Treat every candidate the same during the interview process
- Have more than one interviewer in the room and take notes to document the results
Need an HR partner to prepare your business for new laws and other business administration headaches? Contact GMS’s New Jersey office or one of our other locations today to talk to one of our HR experts.