On January 1, 2020, the New Jersey law that prohibits employers from requesting or relying on job applicants’ salary history in the hiring process. Under the law, salary history includes prior wages, salaries or benefits.
The law prohibits New Jersey employers from (1) screening job applicants based on wage, salary, and benefits history or (2) requiring a minimum or maximum salary history criteria. However, if an applicant “voluntarily, without employer prompting or coercion” discloses their salary history, an employer may verify that applicant’s salary history and consider that salary history when determining salary, benefits, or other compensation for that candidate. Employers cannot factor an applicant’s refusal to volunteer salary history information into an employment decision.
The new law does not apply to internal transfers or promotions or an employer’s use of prior knowledge obtained from a candidate’s prior employment with the organization. Further, the salary history ban does not apply to any federal law or regulation that requires the disclosure of a applicant’s salary history.
If a position includes incentive or commission plans, an employer is allowed to discuss the “terms and conditions” of incentive and commission plans the applicant was subject to at a previous organization, as long as the employer does not ask about specific dollar amounts, and the new job includes an incentive or commission plan.
In addition, if a background check vendor discloses salary history in a background check after an employer informs them that salary history information is not to be included, that disclosure does not violate the law. However, the employer has an obligation to destroy the salary history information and not use it in making an employment decision.
Employers with operations in New Jersey who violate the salary history ban face civil penalties of up to $1,000 for a first violation, $5,000 for a second violation, and up to $10,000 for each subsequent violation.
In light of the new law, New Jersey employers may want to review the contents of job applications, interview guidelines, and instructions to background check vendors to ensure that these materials comply with the salary history ban.