Delaware and Oregon have become the latest states to address pay equity by prohibiting employers from asking job applicants how much they earned in previous jobs. The Delaware measure (House Bill 1) was signed June 14 by Gov. John Carney (D), and the more sweeping Oregon Equal Pay Act (House Bill 2005) was signed June 1 by Gov. Kate Brown (D).
The new laws add to a growing wave of bans on salary history inquiries. Similar restrictions were enacted recently in Massachusetts, Puerto Rico, New York City, and Philadelphia. San Francisco is poised to join the list with a measure that received initial approval from the city's Board of Supervisors on June 27.
In addition, a couple of states have different provisions related to pay history. In California, for example, employers can’t point to employees' prior salary, by itself, in justifying a disparity in compensation.
The idea behind the salary history laws is that pay inequality can follow people. If workers experience pay discrimination in the course of their careers, disclosing past salary details will most likely put them at a disadvantage down the road when negotiating subsequent compensation packages. In other words, once a disparity in compensation is introduced, it can reduce a person’s earning power across an entire career.
Salary Inquiry Restrictions
When it comes to asking applicants about compensation, the restrictions employers will face under the newly enacted measures in Delaware and Oregon are very similar in three areas.
• Both laws bar employers from seeking the pay histories of applicants before making employment offers.
• They both prohibit salary-based screening of job applicants, where prior compensation must satisfy certain minimum or maximum criteria.
• After an employment offer has been made and compensation terms have been spelled out, the laws allow for the confirmation of salary history information.
The Delaware law is slated to take effect in December. Oregon’s law carries an earlier effective date, in September, but employers can’t be sued for violating the pay history provisions until Jan. 1, 2019, and they won’t face penalties in the form of compensatory or punitive damages until 2024.
Oregon Law Goes Further
The Oregon Equal Pay Act addresses more than salary history inquiries. For one thing, it expands the state’s existing equal pay provisions so they don’t focus only on gender-based bias, but also prohibit pay discrimination based on race, color, religion, sexual orientation, national origin, marital status, disability, age, or veteran status.
In clarifying what does and doesn’t constitute pay discrimination, the law provides that pay disparities are permitted if they exist because of seniority systems, merit systems, earnings that are tied to quantity or quality, workplace locations, travel, education, training, experience, or a combination of those factors.
And as a way to encourage proactive steps in combatting pay discrimination, the Oregon law allows employers to avoid compensatory and punitive damages if they have conducted an audit and taken steps to eliminate pay inequities. This provision comes into play when employers are hit with complaints. They can have a court disallow additional damages if they show that they've performed an "equal-pay analysis" within the past three years, fixed the complaining worker's pay differential, and made progress in addressing pay inequities for other members of the same protected class.
Catching Fire, Facing Pushback
As more jurisdictions enact salary history bans, employers will undoubtedly face new compliance challenges. While most would agree that pay inequity should be rooted out, employers don’t necessarily support the spread of new pay equity laws.
Companies "are almost throwing up their hands at the prospect of different requirements in different jurisdictions—a ban on pay history being just one of the pieces to comply with," David M. Wirtz, a shareholder in Littler Mendelson’s New York office, told Bloomberg BNA in a recent interview (see "Will Pay History Bans Complicate Hiring Practices?").
When legislative trends like this emerge, employers and industry groups commonly respond with a combination of political lobbying and lawsuits. In Philadelphia, the local Chamber of Commerce mounted a legal challenge to block that city’s ban on salary history requests.
The Philadelphia law was slated to take effect May 23, but the city delayed enforcement in light of the litigation. In June, the Chamber filed an amended request for an injunction that would block the ordinance.
"We remain confident the law will be upheld in court," a spokesman from the mayor’s office told Bloomberg BNA. He added that the city will adhere to its agreement not to enforce the ordinance until the Chamber’s motion for preliminary injunction is resolved.
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