On July 25, 2019, Acting Gov. Sheila Oliver signed NJ A1094 (“the Law”) banning salary history requests in New Jersey. The Law will take effect on Jan. 1, 2020.

The Law makes it unlawful for an employer to (1) screen a job applicant based on the applicant’s salary history, (2) require that the applicant’s salary history satisfy any minimum or maximum criteria or (3) use an applicant’s refusal to volunteer compensation information as a factor in any employment decision.

However, the Law also defines several situations in which an employer may consider salary history. First, employers may consider an applicant’s salary history in determining compensation if the applicant voluntarily, “without prompting or coercion,” provides the information. Additionally, after the employer has made an offer of employment, the employer may ask an applicant to provide him with a written authorization to confirm salary history.

The Law does not apply to applications for transfer or promotion with a current employer or to actions taken pursuant to any federal law requires the disclosure of salary history. The Law does not prevent employers from performing background checks seeking non-salary-related information, or from acquiring salary history information that is publicly available; however, an employer may not “retain or consider” that information when determining the compensation package to be offered to the applicant.

Employers that do business in multiple states can include a salary history inquiry on their employment application, so long as the application states that applicants who will be working in New Jersey do not have to answer the question.

An employer that violates the Law faces liability for a civil penalty of up to $1,000 for a first violation, $5,000 for a second violation and $10,000 for each subsequent violation.

Illinois passed a similar law on July 31, 2019. Illinois now prohibits employers from (1) screening a job applicant based on the applicant’s salary history; (2) requesting or requiring wage or salary history as a condition of being considered for employment, being interviewed or being considered for an offer of employment; and (3) requesting or requiring that an applicant disclose wage or salary history as a condition of employment. The Illinois law will take effect on September 29, 2019.

Similar to the New Jersey law, the Illinois law does not apply to transfers or promotions within the same employer. Contrary to the New Jersey law, however, employers may not consider or rely on a voluntary disclosure of salary history as a factor in determining whether to make an offer or determine an applicant’s compensation.

Employers violating the Illinois law face damages not to exceed $10,000, and the court may award costs and attorneys’ fees.

New Jersey and Illinois join at least 18 other states and a number of cities that prohibit salary history questions during the application stage of employment. Employers should review and revise their employment applications to delete any salary history questions or include a disclaimer where that would suffice under applicable law. Employers should also train recruiters and managers that they may not ask applicants for salary history information during an interview prior to making an offer of employment.

If you have any questions about or need help with this new law, our team would be happy to assist.