New Jersey recently enacted a new law prohibiting employers from seeking or relying on a job applicant’s salary history. The law, which will take effect on January 1, 2020, prohibits employers from: (1) screening job applicants based on the applicant’s prior salary history, which includes prior wages, salary and benefits; and (2) requiring that a job applicant’s salary history satisfy any minimum or maximum threshold. New Jersey follows New York City in its salary ban law enacted in 2017.
Certain exceptions to the NJ salary law exist:
- If an applicant voluntarily, without prompting or coercion, discloses his or her salary history, the employer may: (1) verify that the information the applicant provided was accurate; and/or (2) use the information to determine the applicant's compensation. An applicant’s refusal to volunteer compensation information cannot be considered in any employment decisions.
- An employer may obtain written authorization from the applicant to confirm salary history after an offer of employment that contains an explanation of the total compensation package.
- Internal transfers or promotions for existing employees are excluded from the statute.
- If an employer is required to obtain or verify salary information by federal law or regulation, an employer is permitted to obtain the information to establish compensation.
- Employers may discuss the substance of incentive and compensation plans covering the applicant at a prior employer, provided that the employer does not ask about the specific compensation in the plans and the job to which the applicant applied with the prospective employer includes an incentive or commission component.
- If an employer conducts a background check with a credit reporting agency, and directs the agency not to disclose salary history to the employer, but the background check report inadvertently includes compensation, the disclosure will not violate the law. However, the employer must destroy the salary-history information and is prohibited from using it.
Employment agencies are partially insulated under the law. Applicants may disclose salary history data and information regarding the applicant's experience with incentive and commission plans to an employment agencies used by an applicant for job placement, and the prospective employer may use such information provided that the applicant provides express written consent to use the data.
An employer that violates the law will be liable for a civil penalties of up to $1,000 for the first violation, $5,000 for the second violation, and $10,000 for each subsequent violation.
Prior to January 1, New Jersey employers should review and make necessary modifications to their application process regarding salary history.