Salary History Ban: Everything Employers Need to Know

To help eliminate pay discrimination, over a dozen states and localities have enforced salary history bans, or laws prohibiting employers from asking job candidates information about their salary history. To comply, some companies are updating job applications, company practices, and so forth. Each violation can result in a penalty of $100 to over $5,000.

If you need help avoiding labor law compliance issues, consider Zenefits. You’ll have access to a team of compliance experts who will keep you up to speed on the human resource laws your business needs to follow. You can also use the salary handbook builder to revamp your policies and procedures if you find yourself subjected to a major legislation change, like a salary history ban. Sign up for a free demo today.

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Salary Information Ban Laws

The laws governing pay history bans vary by location. For instance, California’s ban covers the entire state; employers are banned from requesting a job applicant’s salary history, but they can ask the candidates to describe their ideal salary range for the open position. New York State, on the other hand, does not have a state-wide ban—only four jurisdictions prohibit employers from asking salary history questions. And one jurisdiction, Suffolk County, doesn’t allow questions about expected salary ranges.

Here are the rules you should generally follow to avoid violating salary history ban laws:

• Don’t ask applicants how much they earned in their previous jobs.
• Don’t ask job candidates’ current or former employers about their pay history.
• Don’t ask the candidates’ current or past co-workers for salary history information.
• Don’t use any salary history information you receive to determine how much to offer a job candidate.
• Review the details of any salary information bans your business must comply with; verify that you’re allowed to ask for salary expectations instead of assuming.

Keep in mind that the concept of banning salary history is still fairly new. Check your state for updates often as they are subject to change at any time. Also, don’t assume the exceptions that exist in one state can be applied in yours. All states and localities have specific rules and penalties surrounding the pay history ban.

Salary History Ban States & Localities

In 2017, New York became the first state in which any form of a salary ban was enacted—there is no state ban but some localities have laws in place. Since then, California, Connecticut, Hawaii, Massachusetts, Oregon, and Vermont have followed suit, each passing their own state-wide salary history ban laws for all employers.

Check the map below to see if your business is in a salary history ban state:

Localities Restricting Salary History Questions

Numerous localities, in addition to U.S. territory Puerto Rico, have passed legislation restricting certain types of employers from requesting salary history information from job candidates. Some bans only cover city or county agencies, while others apply to all employers within that jurisdiction.

Check the table below to see if there are any local bans that apply to your business:

Salary History Ban Localities

If your state or locality has regulations in place restricting your use of salary history during the hiring process, be sure to research the specifics. Some bans only apply to employers with a certain number of employees, and others are only applicable to city or county employers. In addition, some salary history bans have been drafted but won’t go into effect until after this article is published.

Outlawing the Pay History Ban

There are a couple of states, Michigan and Wisconsin, that have prohibited bans on salary history altogether. Local governments in these states aren’t allowed to regulate the salary information that employers request from job applicants during the hiring process.

What Started the Ban on Salary History?

The idea of prohibiting salary history started as a way to resolve historical pay gaps that have impacted employees due to their gender, race, background, and so on. Over time, many studies have shown that certain demographics average lower wages than their peers for doing the same job. In 2018, women earned 85% of what men earned, according to a Pew Research Center earnings study. And in 2015, a Pew study on racial wage gaps found that black workers earned 75% as much as white workers.

Job candidates who have experienced pay discrimination at any point in their careers usually feel the impact on their earnings for years to come. This means that employers who use job applicants’ salary history to determine how much to pay them could continue to perpetuate the pay discrimination.

Using candidates’ current salary as a base for determining how much their work is worth in the market assumes (many times, incorrectly) that they’re being paid fairly in the first place. And the reality is that many employees who identify with disadvantaged groups (e.g., women, minorities) are currently or have historically been underpaid.

Banning companies from asking potential new hires for salary information forces employers to set wages based on other factors. Work experience and credentials should be considered in addition to the market value of your job candidates’ skill sets to ensure you offer new employees fair pay.

Who Does Pay Discrimination Impact the Most?

Pay discrimination affects more than just women and minorities. There are numerous other demographics that are susceptible to pay equity issues.

Here are common groups of people who experience wage gaps more than others:

• Minorities: This can include anyone who belongs to a group that doesn’t fit into the majority population. Usually, the term “minority” refers to different race and ethnic groups, such as African Americans, Hispanics, Latinos, and so on.
• Women: Females in all occupations have experienced pay gaps over the years, but the largest pay gaps have been in the finance and healthcare industries.
• Employees with a work history gap: Sometimes, employers will unfairly judge and underestimate job candidates who have taken significant time off between jobs.
• Candidates with criminal records: Many companies won’t hire candidates who have a criminal background, and some of the employers who do give these job applicants a chance will cut costs by paying them less money.
• Applicants with disabilities: Some employers perceive that applicants with disabilities aren’t able to perform their jobs as well as others, so they will pay them less.
• Single parents: Because single parents are responsible for managing their careers and household on their own, they’re more likely to be discriminated against than parents living in a two-parent household.
• New hires who aren’t Christians: Christianity is the world’s dominant religion, and although people are becoming more diverse in their religious (or non-religious) choices, some employers still hold prejudices against non-Christians, like Muslims or Buddhists.

How to Comply With Pay History Ban Laws

Complying with salary information bans might seem complicated at first, but once you review your hiring process, policies, and procedures, it’ll be much easier. The best thing you can do is remove conversations about your job candidates’ salary history from the application, interview, and job offer process. Walk through your hiring procedures several times before making any changes. You need to identify each step in the process that leaves your company vulnerable to non-compliance.

“Companies and recruiters are rapidly adopting new strategies to comply with the law and navigate negotiations for fair salaries. Forward-thinking companies are reviewing all onboarding and hiring procedures and practices, such as job postings or advertisements, employment applications, interview questions, job offer documents, and salary criteria to eliminate salary questions. There is certainly a cost to equal pay, but societal trends suggest it’s worth it for companies who want to be viewed positively in the face of the #TimesUp movement.

“In 2019 and beyond, the hiring process will focus on a candidate’s objective performance, industry-wide data, and earning potential, rather than their past. If HR professionals stop asking the dreaded salary question, will we see a smaller pay gap for women and minorities who might otherwise perpetually struggle to reach an equitable salary? If I did have a crystal ball, I believe it would say that adopting the Salary History Ban is a win-win-win for all.”

– Aram Lulla, General Manager (HR Division), Lucas Group

Here are steps you can take to ensure your company doesn’t violate a pay history ban:

• Remove salary information requests from all job applications.
• Remove questions about salary from all job interview scripts.
• Retrain your human resources and recruiting team.
• Display labor law posters with salary ban regulations in locations that job interviews are usually conducted and where your human resource team frequents.
• Set up a system to document how hourly wage and salary amounts are determined for new employees.
• Review all print or electronic hiring policies and update them to align with your state’s laws.
• Use a job search site, like Indeed, to do salary comparisons prior to finalizing a job offer.

If you need help hiring for a new position, consider using Indeed. It’s the largest job posting website and has salary comparison tools you can use to help create new job offers.

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Tips on How to Avoid Salary History in Interviews

To avoid asking questions about salary during a job interview, focus on the candidate’s ability to perform the job. Get creative, and ask case study questions that will test their thought process on the spot. Applicants can easily follow a script when answering generic interview questions.

It’s also a good idea to inquire about the results your job candidates have had in former jobs. A resume is good at showing an applicant’s previous job titles and duties, but finding out how well they performed may require more digging.

Your goal should be to gather as much evidence as possible to help you determine if the candidates are a good fit for the job. Just because they were once paid $10 an hour for similar work doesn’t mean they shouldn’t be paid the $50,000 a year that their experience is currently worth.

Penalties for Violating Bans on Salary History Questions

Penalties for violating the pay history bans vary, depending on the state or local laws. Some states don’t have clear penalties as of yet, and others subject violators to pay back pay, civil penalties, and even reinstate job applicants who were dismissed on illegal grounds (salary history). Here’s how a couple of the laws differ:

In San Francisco, employers are given a notice and warning for their first violation. They can be charged up to $100 for second violations that occur within 12 months after the first violation, and employers may have to pay up to $500 for any subsequent violations (still within that 12-month period).

Illinois is awaiting approval for a new state-wide ban. Currently, Chicago is the only Illinois city that bans salary history questions, and employers will have to pay up to $5,000 for each violation. They can be subject to up to $10,000 for “special damages” if the court finds that the employer acted with malicious intent.

Proposed Federal Pay History Ban Laws

Currently, there are no federal laws restricting employers from asking their job applicants or the companies for which the applicants work about current or previous salaries. State and local governments are leading the way. However, federal lawmakers are paying attention.

David Reischer, Attorney and CEO of LegalAdvice.com, discusses proposed federal legislation regarding employee wages that he believes will eventually pass:

“The proposed federal legislation, the ‘Paycheck Fairness Act’ (S. 819 and H.R. 1869), would shift the burden on employers to explain why women are paid less for the same job as a man and make it unlawful to pay unequal wages. Although there has been significant Republican resistance in getting this bill passed, it is likely to eventually pass in some form in the coming years.

“Another provision in the bill would make it unlawful to retaliate against workers who share wage information. There are several states that already have passed legislation banning employers from penalizing workers for discussing their salary or inquiring about colleagues’ compensation, but that is not as broad as mandating companies be transparent with posting information on employee pay.”

– David Reischer, Attorney & CEO, LegalAdvice.com

Just to reiterate, it’s important that you stay abreast of your state (or locality’s) specific laws; you wouldn’t want to make the mistake of assuming your state’s pay history ban only applies to state agencies when it has been updated to include all employers.

Salary History Ban Frequently Asked Questions (FAQs)

In this article, we discussed the salary history ban. However, we realize you may have more questions, and we address them here.

What is Ban-the-Box?

Ban-the-Box is a policy that many states, cities, and counties have adopted to give job applicants an opportunity to be judged by their qualifications before any criminal convictions are considered. Employers who operate under Ban-the-Box laws must remove any questions about conviction history from their job applications. Some employers are also required to delay background checks until later in the hiring process.

What are the odds that the salary history ban will become a federal mandate?

The odds of the salary history ban becoming a federal mandate are high. It’s not rare that laws that began at the state level are eventually adopted by the federal government. Each year, more states and cities are adopting some form of the salary history ban, and there’s no reason to think the momentum will stop.

What is salary history?

Salary history is an employee’s past earnings, and can include details about other benefits received (e.g., bonuses, paid time off). Usually, new employers ask for a job applicant’s salary history so they can consider it when making a job offer. Since the bans on salary history questions have gone into effect within many states and localities, fewer employers are requesting salary information during interviews and on job applications.

Is it illegal to ask a job applicant about their current salary?

Asking job applicants about their current salary is only illegal in some states and localities. There are no federal laws restricting employers from inquiring about a candidate’s job salary history. Salary history ban state, city, and county laws are changing quickly, however. Even if a state doesn’t currently have a ban in place, like Florida, there’s no guarantee there won’t be one enacted soon.

Bottom Line

Salary history bans restrict employers from requesting information about job applicants’ past earnings. They were created to combat pay discrimination and are being adopted by numerous states and cities. Employers should be careful to research the specific ban that applies to their business so they can avoid spending thousands of dollars in penalties.

If you need help keeping your business compliant, consider Zenefits. It’s a human resources information system that helps you build employee handbooks, gives you access to a team of HR experts, and pays your employees. Sign up for a free demo today.

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