San Francisco is the latest jurisdiction to pass a law that prohibits employers from inquiring about prior salary history during hiring. New York City, Boston, Philadelphia, Pittsburgh and New Orleans already have similar laws, and in a concerning trend for employers, 26 states are currently considering such legislation.
The San Francisco city ordinance went into effect on July 1, 2017, and restricts employers from (1) considering an applicant’s salary history in determining whether to make an offer of employment or the amount of salary to offer; (2) inquiring about salary history; (3) retaliating against an applicant that declines to provide salary history; and (4) releasing a current or former employee’s salary history to a prospective employer without written authorization. Notably, the restrictions in the San Francisco ordinance, like similar laws in New York City and New Orleans, prohibit an employer from conducting a search of publicly available records to obtain salary history information.
Importantly, these laws do permit employers to (1) consider an applicant’s salary history if the applicant voluntarily discloses such information and (2) discuss an applicant’s salary expectations as it relates to their current employment, including unvested equity, deferred compensation or a bonus that an applicant would lose by virtue of leaving current employment.
Laws prohibiting employers from asking about salary history are aimed at reducing the gender pay gap, with hopes of encouraging employers to determine salary based on other factors, such as merit, experience and the market, rather than perpetuate pay disparities by paying an applicant based on past compensation.
To ensure compliance and get ahead of this latest “pay equity” trend, employers should consult with counsel to carefully assess their hiring process and evaluate how new salary history legislation may impact their business.