On July 25, 2019, New Jersey enacted a law banning salary history inquiries, joining 18 other states in doing so, including New York and many municipalities.
The law, NJA1094, becomes effective on January 1, 2020. The law prohibits New Jersey employers from inquiring about an applicant’s salary history in the application process or using an applicant’s refusal to provide salary history in the hiring process. The law also prohibits an employer from setting certain minimum or maximum salary history criteria and proscribes consideration of a refusal to provide any such salary history information as a factor in any new employment decision. It is only after a conditional offer of employment is made, and provided that the employer first provides an “explanation of the overall compensation package,” that an employer may confirm an applicant’s salary history, including by requiring a background check.
If an applicant voluntarily offers salary history, the law allows the employer to consider same. Employers may also ask an applicant his/her salary “expectations,” but should be cognizant of the fact that basing one’s salary on prior compensation could expose the employer to equal pay issues and potential claims under the Diane B. Allen Equal Pay Act.
Employers who operate in multiple states may include a salary history inquiry on the employment application provided that the application clearly states that applicants who will be working in New Jersey should not answer the question.
The law also amends the New Jersey Law Against Discrimination (“NJLAD”) to make it a violation of the NJLAD to screen an applicant based on salary history or request that a salary history satisfy any minimum or maximum criteria.
An employer who violates the law will be subject to civil penalties.
New Jersey employers should immediately review their hiring processes to ensure compliance with this new law.