New Jersey Latest State to Prohibit Employers From Asking About Salary Histories

New Jersey Latest State to Prohibit Employers From Asking About Salary Histories

Employment
July 29, 2019

On July 25, 2019, New Jersey Lt. Governor Sheila Oliver signed a bill prohibiting employers from asking job applicants their previous salary history. The new law aligns with Governor Murphy’s first official act as governor in 2018, when he signed Executive Order No. 1 prohibiting state agencies and offices from asking job candidates their previous salaries. The new law applies to all employers in New Jersey. The new law takes effect in six months.

The new law states it is an "unlawful employment practice" for an employer to (1) screen a job applicant based on the applicant's salary history, which includes prior wages, salaries, or benefits, or (2) to require the applicant's salary history satisfy any minimum or maximum criteria. Notwithstanding these unlawful employment practices, if an applicant voluntarily (without an employer’s prompting or coercion) gives the employer their salary history, employers may consider salary history in determining salary, benefits, and other compensation for the applicant, and may verify the applicant’s salary history.  Employers cannot consider an employee’s refusal to voluntarily provide compensation information in making any employment decisions. Employers may also request that an applicant, after an offer of employment with an explanation of the overall compensation package, provide them with a written authorization to confirm salary history, including the applicant’s compensation and benefits.

The law does not apply in the following situations:

  • An applicant applies for an internal transfer or promotion with their current employer, or the employer has an applicant’s salary information as a consequence of prior employment with the employer.
  • An employer takes action pursuant to federal laws or regulations that expressly requires the disclosure or verification of salary history for employment purposes, or requires knowledge of salary history to determine an employee’s compensation.
  • An employer attempts to obtain or verify an applicant’s disclosure of non-salary related information when conducting a background check on the job application, so long as the employer specifies that salary history information is not to be disclosed when requesting information for the background check. If that information is disclosed, employers are prohibited from retaining that information or consider it when determining compensation of the applicant.
  • An employer asks an applicant’s previous experience with incentive and commission plans and the terms and conditions of those plans, so long as the employer does not seek or require the applicant to report information about the amount of earnings of the applicant in connection with the plans, and that the employer does not make any inquiry regarding the applicant's previous experience with incentive and commission plans, unless the job with the potential employer includes an incentive or commission component as part of the total compensation package.

If an employer violates this law, they will receive a civil penalty of $1,000 for the first violation, $5,000 for the second violation, and $10,000 for each subsequent violation. Until then, employers should be vigilant in informing and training those involved in their hiring practices of the new requirements. Should you have any questions, or if you would like to discuss how this new law may impact your company’s hiring practices, please contact your regular Saul Ewing Arnstein & Lehr labor and employment attorney.