Effective January 1, 2020, New Jersey employers are prohibited from 1) screening job applicants based on the applicant’s salary history; or (2) requiring an applicant’s salary history to satisfy any minimum or maximum criteria.
Who is subject to the law?
Employers that employ persons or take applications in the state of New Jersey, including employment agencies.
Please note that employers that do business in multiple states may include a salary history inquiry on an employment application, however, it must include an instruction immediately preceding the salary history inquiry that applicants who will be working in New Jersey do not have to answer that section.
Who is protected under the law?
The law protects applicants for a position in the state of New Jersey.
Are there permitted circumstances for use of salary history information?
The law outlines the following exceptions:
- If an applicant “voluntarily, without employer prompting or coercion,” provides his or her salary history information, the employer may consider and verify it;
- If the applicant provides written authorization to confirm salary history either to the employer or an employment search agency;
- If the employment opening includes an incentive or commission element, employers are permitted to ask about an applicant’s previous experience with incentive and commission plans, as long as the employer does not seek the amount of the earnings;
- The law does not apply to applications for internal promotions or transfers;
- The law does not prohibit employers from acting pursuant to applicable federal law or regulations that expressly require disclosure, verification or knowledge of salary history.
Is an applicant protected from retaliation?
An applicant’s refusal to volunteer compensation information is not to be considered in any employment decisions.
How is the law enforced and what is an employee’s right of redress?
If violated, this new law gives applicants the ability to bring a private right of action against the prospective employer.
What are the penalties?
Employers may face civil penalties of up to $1,000 for a first violation, up to $5,000 for the second violation and up to $10,000 for each subsequent violation. The law also amends the New Jersey Law Against Discrimination (NJLAD) to make asking about salary history an unlawful employment practice if the applicant belongs to a protected class. An employer that violates the provisions will also be subject to remedies under the NJLAD.
Given the heavy potential penalties for noncompliance, employers should be proactive in taking steps to reduce potential exposure by being mindful of the following:
- Reviewing job applications and related processes and eliminating questions seeking an applicant’s current or past salary.
- Training or hiring personnel to ensure compliance.
- Stating in employer job postings that the employer does not seek salary history information from job applicants.
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