New Jersey Latest State to Restrict Salary History Inquiries

Author: Michael Cardman, XpertHR Legal Editor

July 31, 2019

A new law will prohibit employers in New Jersey from screening job applicants based on their salary history or requiring that applicants' salary history satisfy any minimum or maximum criteria.

The law is intended to help close the gender wage gap. A 2017 study shows that women in New Jersey are paid 80 cents on the dollar compared to men, squarely in the middle of the pack compared to other states' wage gaps.

"This bill provides a means of narrowing the wage gap by making it less likely for employers to unintentionally perpetuate the gap by basing salary offers for new hires on their previous salary, which has a disproportionate impact on female hires," said one of the bill's sponsors, Assemblywoman Joann Downey.

The law takes effect January 1, 2020, at which time New Jersey will join a host of other states and localities that have enacted similar salary history inquiry restrictions.

The law will allow employers to:

  • Consider salary history in determining applicants' salary, benefits and other compensation if they voluntarily provide it; and
  • Verify applicants' salary history if they voluntarily provide it; and
  • Request that applicants provide a written authorization to confirm their salary history after providing them an offer of employment that includes an explanation of their overall compensation package.

However, an applicant's refusal to volunteer compensation information may not be considered in any employment decisions.

In addition, there will be exemptions for:

  • Applications for internal transfers or promotions;
  • Actions taken pursuant to any federal law or regulation 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;
  • Accidental disclosures of salary history during background checks; and
  • Inquiries regarding applicants' previous experience with incentive and commission plans, as long as the employer does not seek or require applicants to report information about their earnings under these plans.

Employers that violate the new law will be liable for a civil penalty of up to $1,000 for the first violation, $5,000 for the second violation, and $10,000 for each subsequent violation.