Thou Shalt Not Inquire: New Jersey Bans Inquiries into Salary History Effective January 1, 2020

Following New York State’s lead earlier this month, on July 25, 2019, Acting Governor Sheila Oliver signed equal pay legislation prohibiting all New Jersey employers from seeking salary history, includes wages, salaries, and/or benefits, from applicants or current employees. Governor Murphy previously signed an Executive Order on January 16, 2018 banning salary history inquiries by state governmental entities.

Effective January 1, 2020, employers will be barred from screening job applicants based on wage or salary history, including requiring applicants to satisfy any minimum or maximum salary criteria. Employers are also prohibited from considering an applicant’s refusal to volunteer salary history in any employment decisions, including finalizing an employment contract.

The new law creates a carve out for employees subject to a collective bargaining agreements or covered by civil service laws. In those cases, employers may offer an applicant for a job information regarding wage or salary rates and may pay those rates if the applicant is hired.

Exceptions to the Salary History Ban Law

Employers are permitted to:

• Consider an applicant’s salary history if voluntarily provided without coercion. If voluntarily provided, employers may verify salary history information. An applicant’s failure to voluntarily reveal salary information cannot be considered by the employer in any employment decisions.
• After an offer of employment has been made to an applicant that includes an explanation of the “overall compensation package”, request that the applicant provide a written authorization to confirm salary history.
• Acquire publicly available salary history information but may not retain or consider that information when determining the salary, benefits, or other compensation of the applicant unless the applicant voluntarily, without employer prompting or coercion, provides the employer with salary history.

The new law also does not apply to following:

• Applications for internal transfer or promotion for the same employer;
• Use of knowledge of previous salary information acquired as a result of an applicant’s prior employment with the employer;
• Actions taken pursuant to a federal law or regulation that expressly requires disclosure, verification, or use of salary history for employment purposes;
• Salary-related information obtained when conducting a background check so long as the employer specifies that salary history information is not to be disclosed. In that case, the employer is prohibited from retaining the information or considering it when determining compensation for the applicant.
• Inquiries regarding an applicant’s previous experience with incentive and commission plans, provided that the compensation package for the position for which the applicant is being considered includes an incentive or commission component and the employer does not seek information regarding the applicant’s previous earnings in connection with any incentive or commission plan.

Multi-State Employers

Employers with operations outside of New Jersey may continue to include a salary history question on employment applications but must include a disclaimer. The disclaimer must be immediately preceding the salary history question instructing the applicant not to answer the question if they are applying for a position located in whole or in substantial part in New Jersey.

Fines & Penalties

Employers who violate the new law are subject to civil penalties in an amount not to exceed $1,000 for the first violation, $5,000 for the second violation, and $10,000 for each subsequent violation collectible by the Commissioner of Labor and Workforce Development. 

The new law also amends the New Jersey Law Against Discrimination (NJLAD) and makes it an unlawful employment practice if the applicant is a member of a protected class.  An employer who violates the provisions of the bill will be subject to remedies available under the NJLAD except for an award of punitive damages.

Bottom Line

New Jersey employers need to focus and document a job candidate’s skills and qualifications for the position and must shift the conversation with a potential applicant away from salary history to the candidate's salary expectations. New Jersey employers must review and update Job Applications, Handbooks and internal HR Policies to ban inquiries regarding salary history, prohibit pay discrimination and retaliation. Human Resources personnel, as well as any individuals involved in the interview or recruiting process, must be trained on the new prohibitions in order to ensure compliance with the new salary ban law to protect itself from liability.

For more information regarding New Jersey’s salary history ban and conducting Equal Pay Audits to ensure your company is implementing nondiscriminatory pay practices, please contact John C. Petrella, Esq., Chair of the firm’s Employment Litigation Practice Group, at jpetrella@genovaburns.com, or Dina M. Mastellone, Esq., Director of the firm’s Human Resources Counseling & Compliance Practice Group, at dmastellone@genovaburns.com or 973-533-0777.