Salary History Ban: Everything Employers Need to Know

To help eliminate pay discrimination, many states have enforced salary history bans, or laws prohibiting employers from asking job candidates information about their salary history. Currently, 19 statewide and 21 local bans are in place. To comply, some companies are updating job applications and company practices as each violation can result in a penalty from $100 to over $250,000.

If you need help navigating 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 their salary handbook builder to revamp your policies and procedures if you find yourself subjected to a major legislation change like a salary history ban.

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Salary Information Ban Laws

Salary history is an employee’s past earnings and can include details about other benefits received (bonuses, paid time off). Sometimes 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 in many states and localities, fewer employers are requesting salary information during interviews and on job applications.

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; however, they can ask the candidates to describe their ideal salary range for the open position. New York State, on the other hand, bans employers from requesting salary history from both potential and current employees and 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.

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

Salary History Bans—States and Localities

While 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, there are multiple state and locality regulations.

It’s important that you stay abreast of your area’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.

States Restricting Salary History Questions

There are currently 19 statewide salary history bans. These bans prohibit some companies from requesting salary history altogether, prohibit salary history inquiries before providing an offer, and prohibit the use of salary history to set pay.

Localities Restricting Salary History Questions

Numerous localities, in addition to US 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.

Salary History Ban Localities

Some states that do not have statewide bans have put into place locality bans in some counties or cities within the state. Additionally, where some states already have a statewide ban in place, there are localities within that state with different rules. Be sure to check the law for your area.

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

If your state and/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.

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.

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 to do salary comparisons before 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.

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, which can reach upward of $250,000, vary depending on 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 those 12 months).
• Illinois has approved a new statewide ban—previously, Chicago was the only Illinois city that banned salary history questions—and employers 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.

What Started the Ban on Salary History?

In 2016, Massachusetts became the first state to prohibit a potential employer from inquiring about salary history before making a job offer. Since then, several other states have followed suit, each passing its own statewide salary history ban laws for all employers. 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.

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. Numerous other demographics are susceptible to pay equality issues. Over time, many studies have shown that certain demographics average lower wages than their peers for doing the same job. For example, a PayScale data report states that in 2021 women earn 82 cents for every dollar earned by men. However, when comparing the same job and the same skills, women earned 98 cents for every dollar earned by men. Additional data in the study indicates that men and women in a minority group earn 69 cents to 89 cents for every dollar earned by a white man. When again comparing the same job and skill set that average increased to 98 cents to 99 cents for every dollar earned by a white man.

Job candidates that 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 issue by assuming (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 (women, minorities) are currently or have historically been underpaid.

Here are common groups of people who experience wage gaps:

• 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 races and ethnic groups such as African Americans, Hispanics, Latinos, and so on.
• Women. Females in all occupations have experienced pay gaps over the years.
• 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. This led to the “Ban-the-Box” policy.
• 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. You should be aware that the law prohibits discrimination against anyone with a disability, including in wages.
• 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.
• Non-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, such as Muslims or Buddhists. The law prohibits this type of religious discrimination.

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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