Understanding Tri-State Wage Parity Laws
Over the past few years, several initiatives aimed to limit the disclosure of salary history and mitigate wage disparity have been implemented by state and local governments throughout the U.S. Similar legislation was passed in New York City in October 2017; in Westchester County, NY and the state of New Jersey in July 2018; and became effective in Connecticut in January 2019.
Wage Disclosure is Now Prohibited Across the Entire Tri-State Area
With the Connecticut law now in effect, employers throughout the entire tri-state area are now prohibited from requesting salary history from applicants or employees. While the bans vary slightly in each region based on pre-existing legislation, they nearly all share the same restrictions and requirements. The laws apply to businesses with at least one employee and prohibit organizations from soliciting earnings history from either a candidate or their former employer. In addition, employers cannot use public records to gain insight into a candidate’s prior salary or benefits. Applicants can, however, provide voluntary, unprompted information about prior earnings or benefits throughout the hiring process in order to support a higher wage than offered by the employer.
Why Restrict Wage Disclosure?
The passage of these legislations is rooted in the long-standing wage disparity among women and people of color. On average, women earn 79 cents to each dollar paid to a man with similar experience. Black and Latina women make 63 cents and 54 cents respectively. By encouraging employers to set compensation based on qualifications as opposed to salary history, this legislation is seen as a conscious step towards ending gender and racial pay disparities.
However, nearly two-thirds of HR heads and corporate executives believe the bans will do little to resolve the pay gap. Many fear that the law will instead leave them at a disadvantage during negotiations and may impact the screening process, making it more difficult for hiring managers to successfully filter qualified vs. unqualified applicants.
What this Means for Employers
The following offers top-line highlights and links to specific tri-state resources.
- Employers cannot prohibit a candidate from disclosing or discussing the amount of their wages or the wage of another employer that have been disclosed voluntarily.
- Employers cannot prohibit a candidate from inquiring about the wage of another employee.
- Employers cannot require candidates to sign documentation that denies them the right to disclose or discuss their wages.
- Employers cannot require candidates to sign documentation that denies them the right to inquire about the wages of another employee.
New York City
- Employers cannot ask questions about or solicit information about a candidate’s current or prior earnings or benefits.
- Employers cannot ask a candidate’s current or former employers or their employees about their current or prior earnings or benefits.
- Employers cannot search public records to learn about a candidate’s current or prior earnings or benefits.
- Employers cannot rely on information about a candidate’s current or prior earnings to set their compensation.
Westchester County, New York
- Employers cannot rely on wage history from any current or former employer to determine the wages for a candidate, unless voluntarily disclosed by the prospective employee.
- Employers cannot require candidates to disclose information about their wages from any current or former employer.
- Employers cannot retaliate against an individual for exercising their rights under this law, including opposing any act or practice. Additionally, an employer cannot refuse to hire or otherwise retaliate against an employee or candidate based upon prior wage or salary history.
- Pay differentials between members of any “protected class” performing “substantially similar work” is prohibited.
- Employers cannot decrease the salary of an employee to ensure compliance with the law.
- Employers cannot ask their employees to waive their rights under the law.
- Employees rights to discuss, seek, or obtain information regarding their compensation and the compensation of other employees is protected.
For more information about these laws, please visit the state of Connecticut Public Act No. 18-8; the New York City employer fact sheet; the Westchester County, New York update; or the New Jersey Diane B. Allen Equal Pay Act.
Tips for Compliance
Employers must amend applications and other new-hire documentation to ensure they’re compliant with the legislation while staying vigilant in tracking updates on the laws. Develop training measures for managers, supervisors, and HR personnel, as well as any additional employees conducting interviews. During the interview process, inquire about objective measures of productivity, such as billable hours or sales history. Also, prepare in-depth questions about candidates’ skills and abilities to determine how applicable they are to their potential role. Consider developing a salary range for each position and be transparent with candidates from the get-go. While the ban limits asking about their salary, discussing candidate’s anticipated pay and benefits is still on the table, which can help guide your offer.
Additionally, consider working with a staffing partner to find talent without exposing your organization to liability. Partners like Benchmark IT are well-versed in the evolving legislation and have deep expertise in market rates to help you more accurately determine competitive compensation packages.
For more information about how Benchmark IT can help your organization successfully navigate the salary history ban, reach out today!