Employers may need to adjust hiring and recruiting practices before the law takes effect in December.

On Thursday, December 14, 2017, a new law will take effect in Delaware forbidding employers from requesting compensation history from job applicants. The stated purpose of Delaware’s new law is to close the pay gap between men and women within Delaware.

Specifically, starting on December 14, 2017, it will be unlawful for employers in Delaware to

  • “[s]creen applicants based on their compensation histories, including by requiring that an applicant’s prior compensation satisfy minimum or maximum criteria,” or
  • “[s]eek the compensation history of an applicant from the applicant or a current or former employer.”[1]

Title 19 of the Delaware Code broadly defines “compensation” to include “monetary wages as well as benefits and other forms of compensation.”[2] As written, this definition may be interpreted by regulators and courts to encompass topics typically discussed between employers and applicants during the application process, including, but not limited to, salary, bonuses, deferred compensation, vacation, medical benefits, and leave policies.

The new law expressly states that it does not prohibit an employer or an employer’s agent from discussing or negotiating “compensation expectations” provided that the employer or the employer’s agent does not request or require the applicant’s compensation history.[3] In addition, after an offer of employment “with terms of compensation” has been extended to an applicant, employers are permitted to seek the applicant’s compensation history for the sole purpose of confirming that information.[4]

Employers using recruiters also need to adjust hiring practices because the law holds employers liable for the actions of their “agents.” There is, however, a defense for employers if they can demonstrate that agents or recruiters acting on an employer’s behalf were informed by the employer of Delaware’s new statutory requirements and instructed by the employer to comply with the new statutory requirements while acting on the employer’s behalf.[5]

The new law provides that the Delaware Department of Labor (DDOL) has the authority to enforce its provisions.

It further provides for civil penalties ranging between $1,000 and $10,000 per violation for employers who fail to adjust their interview and application processes in compliance with the new law.[6]

Next Steps for Employers

Employers should revise existing handbooks, policies, and trainings to prohibit inquiries into wage history during interviews or at any time in the hiring process. Additionally, Delaware employers need to ensure that they communicate these new restrictions to recruiters and any other agents acting on their behalf during the interview and hiring process.