Legal Blogs and Updates

Beginning on January 1, 2020, it will be illegal in New Jersey for employers to screen a job applicant based on salary history (including prior wages, salary, commission, benefits, or any other current or previous compensation) or to require that salary history satisfy any minimum or maximum criteria. Employers are also barred from considering an applicant’s refusal to volunteer compensation information in any employment decision.

An employer may, however, verify salary history and consider it in determining compensation if an applicant discloses that history voluntarily (i.e., without prompting or coercion). Employers may also request written authorization from any applicant to confirm compensation history after making an offer of employment and providing an explanation of the compensation package.

The new law does not apply to: (1) internal transfers/promotions; (2) use of prior knowledge based on the applicant’s previous employment with the employer; (3) actions taken pursuant to any federal law that requires salary history for employment or compensation purposes; (4) background check requests, so long as the employer specifies that salary history is not to be disclosed when requesting the check; and (5) inquiries regarding experience with incentive/commission plans, but only if the open position has an incentive/commission component and the employer does not request information about the amount of incentive/commission earned by the applicant. 

Violations of the law may result in steep penalties: up to $1,000 for the first violation, $5,000 for the second violation, and $10,000 for each subsequent violation. Since the law is designed to ensure that employees receive salaries that are commensurate with their skills, qualifications and experience, and to prevent the perpetuation of wage inequities based on protected characteristics such as sex or race, some remedies under the New Jersey Law Against Discrimination are available if a violation involves an applicant from a protected class. The available remedies do not include punitive damages or attorneys’ fees. 

In order to prepare for the new law, employers should: (1) review their employment applications to remove inquiries relating to prior salary; (2) train managers and HR personnel involved in hiring regarding the requirements of the statute so they are aware of what information can and cannot be requested; and (3) assure that any background check forms direct that no salary history should be provided (unless an offer with full compensation details has been made to the applicant).

Our team of employment law attorneys are available to assist employers with any questions regarding the new law as well as their compliance efforts, including educational training.