On July 5, 2019, Toledo, Ohio Mayor Wade Kapszukiewicz signed the Pay Equity Act to Prohibit the Inquiry and Use of Salary History in Hiring Practices. The ordinance generally prohibits employers (including the employer’s agents, and job placement or referral agencies) located within the City of Toledo that employ 15 or more employees within Toledo, from inquiring1 about, screening or relying upon the salary history of a job applicant in making an employment offer.2
Like jurisdictions that have passed similar ordinances across the country, the City of Toledo determined that basing an employee’s current salary upon his or her prior salary can perpetuate existing wage inequality. The city clarified that its aim in enacting the ordinance is to “reduce pay inequity for all” and ensure that employee wages are “based on job responsibilities and level of experience” rather than on an applicant’s prior salary. The ordinance defines “applicant” broadly to include any individual who applies for employment to be performed within the geographic boundaries of the City of Toledo, and whose application will be processed or received in Toledo, regardless of whether the applicant is interviewed.
The ordinance prohibits employers from asking an applicant about his or her salary history. The ordinance likewise precludes employers from screening job applicants based on their compensation history and from requiring that an applicant’s salary history satisfy certain minimum or maximum criteria. There is no violation if the applicant voluntarily, and without prompting, discloses his or her compensation. However, the ordinance prohibits employers from relying on an applicant’s salary history—even where voluntarily disclosed—in determining whether to offer the applicant employment or in determining the applicant’s compensation. The ordinance includes an anti-retaliation provision, making it illegal for employers to refuse to hire or to otherwise disfavor an applicant who declines to disclose his or her salary history.
As with similar laws, Toledo’s salary history ban includes a number of exceptions to its general prohibitions. For example, an employer may “engage in discussions” with an applicant about his or her compensation “expectations,” including those expectations relating to unvested equity or deferred compensation that an applicant would be forced to forfeit by virtue of the applicant’s resignation from their current employer. Further, the ordinance’s prohibitions do not extend to current employees who apply for an internal transfer or promotion with their current employer. Nor do such prohibitions extend to former employees who are re-hired by the employer within five years of the applicant’s separation date, provided the employer already maintained the former employee’s salary history data. An employer also will not violate the ordinance if it attempts to verify a voluntary and unprompted disclosure of the applicant’s salary history, or compensation information learned through a background check, so long as the employer does not rely upon the disclosure or information in determining whether to offer employment to the applicant or what compensation to offer to the applicant.
The ordinance imposes other requirements on employers: it provides that “upon reasonable request,” an employer must provide a “pay scale” for the position sought to an applicant for employment, but must do so only after the employer has made a conditional offer of employment to the applicant. The term “pay scale” is not defined by the ordinance. Accordingly, it remains to be seen whether a salary or wage range will be sufficient to meet this requirement, or, whether an employer will be required to create a pay scale where none exists.
The ordinance will take effect on July 4, 2020 and maintains a statutory limitations period of two years. Toledo employers should reexamine job applications and hiring documentation, and remove any references or requests for salary history information. Toledo employers should also train hiring managers, recruiters and any outside recruiting agents to ensure they are familiar with the ordinance’s provisions.