On July 26, 2019, the State of New Jersey enacted into law a bill prohibiting pre-employment salary inquiries. Important provisions are addressed below.
The new law provides that effective January 1, 2020, employers in New Jersey generally may not make any pre-employment salary inquiries of applicants until after a conditional offer of employment has been made. Employers will also be prohibited from requiring that an “applicant’s salary history satisfy any minimum or maximum criteria.”
However, employers will be able to consider an applicant’s salary if the applicant voluntarily (meaning, without prompting or “coercion”) provides his or her salary history. The fact that an applicant refuses to volunteer this information cannot be used in making any employment decisions.
After an offer of employment has been extended to a job candidate, employers will then be able to request that the applicant authorize a background check, including the applicant’s compensation from prior employers. This assumes, of course, that the offer of employment includes an “explanation of the overall compensation package.”
The new law specifically does not apply in certain situations, including:
Requests by current employees for internal lateral moves or promotions or “use by the employer of previous knowledge obtained as a consequence of prior employment with the employer”;
Action taken consistent with federal law or regulation expressly requiring disclosure/verification of salary history;
Background searches (properly authorized by the applicant) excluding salary history information1 ;
For positions involving incentive or commission plans, inquiries about an applicant’s “previous experience with incentive and commission plans and the terms and conditions of the plans”; however, employers are not allowed to ask about the “amount of earnings of the applicant in connection with the plans”.
This law does not pertain to employment agencies contacted by applicants for job search assistance; however, these agencies are prohibited from sharing or disclosing salary histories with any prospective employers (without express written authorization by the applicant).
New Jersey employers conducting business and employing individuals in states outside of New Jersey may continue to request salary history on job applications and during the interview process (consistent with those States’ laws); however, employers must include the following disclaimer:
An applicant for a position the physical location of which will be in whole, or substantial part, in New Jersey is instructed not to answer the salary history inquiry.
Finally, while the law does permit employers to “acquire” publicly available salary history information, employers are not allowed to “retain or consider” that information (without the applicant’s permission) when determining the offer of compensation to an applicant. This provision seems to be fraught with peril, so we recommend not conducting any pre-offer searches of publicly-available information.
The law provides for civil penalties, to be enforced by New Jersey’s Department of Labor and Workforce Development.
The Bottom Line. Employers doing business in New Jersey should start reviewing job applications and recruiting processes and procedures before year end to ensure compliance by January 1st. This law also reinforces our recommendation that employers wait to conduct pre-employment background searches/screening until after a conditional offer of employment has been made.
1 Employers must ensure that the vendor used has been instructed not to disclose salary history information. Employers must properly discard or return this information if improperly received and employers cannot rely upon it.