Salary Bans Require New Approach to the Hiring Process

Hospitality Trendz July/August 2018

Carly Baratt, Associate in the Employment, Labor & Workforce Management practice, in the firm’s New York office, authored an article in Hospitality Trendz, titled “Salary Bans Require New Approach to the Hiring Process.”

Following is an excerpt (see below to download the full version in PDF format):

It used to be common practice for employers to ask applicants about their current salary or salary history during the recruitment process. Indeed, no federal law prevents such questions. However, since 2016, an ever increasing number of states and localities have passed legislation prohibiting employers from asking applicants about their prior compensation. This is an effort to prevent well-documented pay disparities between men and women by eliminating the anchoring effect of salary histories. Massachusetts was the first such state to enact what is now commonly referred to as a “salary ban.” Under Massachusetts’s law, which takes effect July 1, 2018, employers cannot screen candidates based on their previous salary or ask salary-related questions during the interview process.

To date, seven other states and one commonwealth have outlawed pay history questions through similar salary bans: Delaware, California, Illinois, Louisiana, New Jersey, New York, Oregon, and Puerto Rico. In addition, the following municipalities have adopted salary bans: New York City, San Francisco, San Diego, New Orleans, Pittsburgh, Albany, Westchester County, and Philadelphia. A number of other states are in the process of passing similar legislation, including but not limited to Texas, Rhode Island, Maryland, Vermont, Hawaii, Florida, New Hampshire, Virginia, and Colorado. Most jurisdictions have construed the term salary broadly to encompass all manner of compensation, including but not limited to bonuses, a car allowance, and a retirement plan.

Salary bans come in different flavors. For example, the bans adopted by Philadelphia, New Jersey, and New Orleans apply only to public employers, whereas most of the state salary bans apply to private and public employers alike. California’s salary ban prohibits an employer from considering prior salary in deciding whether or not to hire an employee, even if that information is already or becomes known to the employer. Delaware’s and Puerto Rico’s salary bans, on the other hand, allow for confirmation of salary history information once an offer has been extended and compensation set, and in the case of Puerto Rico, if the applicant volunteers the information.