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On July 25, 2019, New Jersey enacted a new law that prohibits all employers in the state from asking job applicants about their past salaries or using past pay information to screen applicants for employment consideration.
The new law, which goes into effect on Jan. 1, 2020, also prohibits employers from using an applicant’s past pay information to determine his or her compensation for a position, unless the applicant voluntarily, and without prompting or coercion, discloses his or her pay history.
These prohibitions do not apply when an applicant is a current employee seeking a promotion or other internal transfer. In addition, employers may use any pay history knowledge they have already obtained through their previous employment of an applicant. The law also includes other limited exceptions.
Action Steps for New Jersey Employers
Employers should become familiar with the new law and ensure that any job applications they use in New Jersey either exclude questions about salary history or instruct applicants not to answer any such questions.
As of Jan. 1, 2020, the new law prohibits the following for any employment position that is physically located (“in whole or in substantial part”) within New Jersey:
- Screening job applicants based on their salary histories (which include but are not limited to applicants’ prior wages, salaries or benefits);
- Requiring that an applicant’s salary history satisfy any minimum or maximum criteria;
- Using an applicant’s salary history—other than that which the applicant voluntarily, and without prompting or coercion, provides—to determine his or her salary, benefits or other compensation;
- Considering an applicant’s refusal to volunteer salary history information in any employment decisions;
- Including questions about an applicant’s salary history on a job application, unless an employer operates in more than one state and the application instructs applicants for jobs in New Jersey not to answer the questions;
- Conducting background checks without specifying that an applicant’s salary history is not to be disclosed;
- Asking an applicant about his or her previous experience with incentive or commission plans, unless the position applied for involves these types of plans as part of its total compensation package; and
- Asking an applicant how much he or she earned in connection with prior incentive or commission plans.
The new law’s prohibitions do not apply when a current employee is applying for a promotion or other internal transfer. The new law also allows employers to:
- Use any salary history information about an applicant that they have already obtained through their prior employment of the applicant; and
- Take actions necessary to comply with federal laws or regulations that conflict with the new prohibitions.
Employers that violate the new law may be ordered to pay fines of up to $1,000 for a first offense, $5,000 for a second offense and $10,000 for third or subsequent violations. In addition, individuals who believe an employer has violated the law may file a civil lawsuit against the employer. In these cases, courts may order an employer to pay a plaintiff’s actual damages and reasonable attorney’s fees.