States Begin to Block Bans on Pay History Inquiries; Will Others Follow?

The Michigan and Wisconsin legislatures have passed measures to prohibit local jurisdictions from banning pay history inquiries. The moves go against the tide of salary history bans approved in cities and states across the country in an attempt to close gender and racial pay gaps. 

The Michigan Chamber of Commerce, like groups in other states, supported the preemption legislation because employers seek "one law for all businesses to comply," Wendy Block, senior director of health policy, human resources, and business advocacy at the Michigan Chamber, told Bloomberg Law in an email. 

Michigan Gov. Rick Snyder (R) on March 26 signed legislation that expands the state's 2015 local preemption law by specifying that local governments can't restrict what employers can ask in the interview process beyond existing state and federal laws. Preemption laws bar municipalities and other local jurisdictions from passing ordinances that would differ from state employment law on issues such as minimum wage, paid sick leave, and background check requirements. 

In a similar effort to the one in Michigan, lawmakers in Wisconsin also passed preemption legislation (A.B. 748) that specifically cites salary history among issues that local jurisdictions can't address through ordinances. The Wisconsin measure was signed April 16 by Gov. Scott Walker (R). 

In addition, Iowa, North Carolina, and Tennessee have existing preemption statutes that are more general, barring local governments from adopting employment laws that exceed or conflict with state or federal requirements. 

Failed Attempts in Some States

Other states have made their own attempts. Minnesota's governor vetoed an employment law preemption bill last May, and preemption language in laws in Washington and Mississippi also were voted down. 

There is business support for alignment among state, local, and federal laws because it makes compliance much easier and gives human resources professionals one set of rules to play by, Melissa Murdock, director of external affairs at compensation and HR association WorldatWork, told Bloomberg Law in an email. "This isn't the trend in public policy, though, especially when it comes to employment law." 

Compliance with differing requirements across multiple jurisdictions is especially onerous for small-business owners, Eric Bott, state director for conservative advocacy group Americans for Prosperity Wisconsin, told Bloomberg Law. "From an employer perspective, they cannot function with a patchwork quilt of regulations." 

According to Bott, legislative initiatives aimed at salary history inquiries likely will continue where elected officials at the state level are conservative but local officials, such as mayors or city councils, are liberal. 

"Philosophically, some more conservative states and voters may object to government interference in the hiring process and, therefore, oppose more liberal localities or cities prohibiting employers from asking candidates about their salary history," Murdock said. "However, I don't think this is an issue that is easily categorized as a conservative or liberal issue, which in turn makes it more complicated to predict how states will address it." 

To date, California, Delaware, Massachusetts, Oregon, Washington, and Puerto Rico have passed laws barring employers from inquiring about salary history. Local jurisdictions that have passed such measures include San Francisco; New York City; Albany County, N.Y.; and Philadelphia, but enforcement of the Philadelphia ordinance remains on hold pending a legal challenge. 

Goal in Banning Salary History Inquiries

The intention of salary history bans is to close the wage gap for women and minorities. Data from 2016 showed that women working full time in the U.S. typically were paid 80 percent of what men were paid, according to research from the American Association of University Women. 

"If you start out behind in pay, and future salaries are based on previous salaries that have nothing to do with your new job, it compounds over a lifetime," Kate Nielson, state policy manager for the AAUW, told Bloomberg Law March 30. "It affects current salaries, future salaries, and retirement." 

Employers should strive to avoid basing pay solely on salary history for their own benefit as well, Nielson said. "There are a lot of employers trying to pay workers equally, and if they are relying on past salary they may be introducing discrimination into their pay practices." 

Regardless of state or local law, large employers like Amazon, Bank of America, Wells Fargo, and Progressive have eliminated salary history questions from the hiring process, and other employers are following suit. 

A new survey from WorldatWork found that 37 percent of approximately 835 employers have implemented a policy to stop asking about a candidate's salary history. The survey also shows that 40 percent of employers that haven't adopted a salary history ban are likely to do so in the next 12 months. 

"There continues to be growing concern for employers to ensure their pay practices don't discriminate based on gender. I don't see this going away anytime soon," Murdock said. "Employers, for the most part, want to show their employees, the public, their shareholders, and their competitors that they value diversity and pay people fairly. Because of this, I don't see a huge political demand building from the business community for government to step in at the state level and start overriding local laws on this issue." 


For a rundown on pertinent state and local laws, see our Salary History Provisions Chart (subscription required). You can also take a free trial to HR Decision Support Network and experience a complete HR solution that helps you find answers to your toughest questions.