New Jersey Employers Will Be Prohibited from Using Salary History to Screen Job Applicants

Mike Wallace – Vice President, Government Affairs

Acting Governor Shelia Oliver signed a new law on Thursday, July 25 that prohibits employers from asking job applicants about their salary history before making them a job offer that includes compensation.

The new law, which takes effect on Jan. 1, 2020, would make it an unlawful employment practice for any employer to:

1. Screen a job applicant based on the applicant’s salary history, including, but not limited to, the applicant’s prior wages, salaries or benefits; or
2. Require that the applicant’s salary history satisfy any minimum or maximum criteria.

NJBIA advocated for and received the following provisions that permit employers to:

1. Consider salary history in determining salary, benefits, and other compensation for the applicant, and allowing employers to verify the applicant’s salary history, if an applicant voluntarily provides the employer with their salary history; and
2. Request that an applicant provide written authorization to confirm salary history, including but not limited to, the applicant’s compensation and benefits, after an offer of employment has been made to the applicant.

The bill does not apply to:

• Applications for internal transfer or promotion with an employee’s current employer, or use by the employer who had previous knowledge based on prior employment with the employer;
• Any actions taken by an employer pursuant to any federal law or regulation that requires the disclosure or verification of salary history or requires knowledge of salary history to determine an employee’s compensation;
• Any attempt by an employer to obtain or verify a job applicant’s disclosure of non-salary-related information when conducting a background check on the job applicant;
  • When requesting information for a background check an employer must specify that salary history information is not to be disclosed.
  • If salary history information is disclosed during a background check, an employer cannot retain the information or consider it when determining the salary, benefits, or other compensation of the applicant.
• Employer inquiries regarding previous experience with incentive and commission plans and the terms and conditions of the plans, provided that the employer does not require the applicant to report information about the earnings of the applicant in connection with the plans, and the employer does not make any inquiry regarding the applicant’s previous experience with incentive and commission plans unless the employment opening with the employer includes an incentive or commission component as part of the total compensation program.

Penalties for employers who violate the law include:

• A civil penalty 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. Fines would be collected by the Commissioner of Labor and Workforce Development.
• Additionally, if the applicant is a member of a protected class as defined under the New Jersey Law Against Discrimination (NJLAD), and the employer violates the restrictions on salary history inquiries, the applicant will also have a claim under the NJLAD. The law, however, expressly states that punitive damages and attorney’s fees would not be available to persons aggrieved by the provisions of the bill.

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