How Do Salary History Bans and Salary Transparency Laws Impact U.S. Employers?

Posted · Add Comment
salary-history-bans-salary-transparency-laws-U.S-2022

Pay equity measures promote equal pay for equal or comparable work. They often include a ban on asking candidates about their former compensation until later in the hiring process.

At HireRight, several years ago, we supported pay equity efforts by not asking candidates to disclose their salaries for positions at HireRight and in the screenings we perform for our customers. We also do not report salary history. This means any salary history bans discussed here do not impact screening conducted by HireRight. However, if you ask for salary histories as part of your hiring process outside your background screening process, you should be aware of applicable salary history legislation.

In this post, we’ll cover some of the latest salary history bans and recent salary transparency laws passed in the U.S. These measures, discussed in the HireRight 2022 Q1 Compliance Webinar, can help employers review compliance with this facet of emerging legislation. 

What is a salary history ban?

A salary history ban prohibits employers from asking job applicants questions concerning their previous or current salary. These bans have been introduced to help promote pay equity, particularly benefitting those who may have faced gender or race-related pay disparity in previous jobs. In jurisdictions with a salary history ban, salaries offered for open positions cannot be negatively benchmarked against candidates’ past salaries. Conversely, in some cases, voluntarily disclosed previous compensation can be validated to help negotiate a higher salary offer for a candidate.

Which jurisdictions have salary history bans?

The above table shows 15 U.S. states and eight U.S. cities with effective salary history bans. In addition, here are three new or amended jurisdictions which we’ll look at in a bit more detail: Connecticut, Nevada, and Rhode Island.

  • Connecticut – Effective Jan.1, 2019 (amended 2021)
    Connecticut’s pay equity law prohibits employers from asking about a prospective employee’s wage and salary history unless the prospective employee volunteers the information. However, former compensation can be verified if the candidate shares this information to help negotiate a higher salary. Additionally, as of October 1, 2021, employers in Connecticut are required to disclose the salary ranges or a “wage range” for positions to job applicants and existing employees. 
  • Nevada – Effective Oct. 1, 2021
    Unlike Connecticut’s law, Nevada’s law does not allow employers to rely on information voluntarily disclosed by the candidate. However, as with other salary history bans, Nevada’s law does not prohibit an employer from asking prospective employees about their salary expectations. Nevada employers must also provide the “wage or salary range” or “rate” for any advertised positions.
  • Rhode Island – Effective Jan. 1, 2023
    Rhode Island has passed legislation implementing a salary history ban and requires pay scale disclosures effective January 1, 2023. Under the new law, if a candidate volunteers their salary history to support higher pay, the employer can verify that salary history as they assess whether to bump up the candidate’s compensation offer. Employers in Rhode Island will also need to provide a wage range for a position upon request by a candidate or employee moving into a new position. 
What does “salary transparency” mean?

“Salary transparency” laws require employers to either post or provide on request a salary range for any open positions, whether they are advertised to candidates or existing employees. This can help candidates to assess if a new role is suitable for them based on an advertised remuneration, rather than having to negotiate compensation based on their previous salary.

Which jurisdictions have salary transparency laws?

The map below shows the jurisdictions that currently have laws to promote salary transparency. These include Washington, California, Nevada, Colorado, Connecticut, Rhode Island, Maryland, Cincinnati, and Toledo, Ohio.

New York City is the latest jurisdiction to join this growing list of salary transparency advocates. As of November 1, 2022, employers in New York City will be required to include salary ranges in job postings. The salary range should include the minimum and maximum salaries that the employer intends to pay for the job, promotion, or transfer at the time of the posting.

Going forward

The concept of salary transparency has gained traction in the U.S. over the last two years, and it is expected that we’ll see several more jurisdictions bring in new laws about this in 2022 and beyond.

Sign up for our future compliance webinars with Alonzo Martinez, Associate General Counsel at HireRight, for an update on these and many other issues impacting employers in the U.S.  

Additional Resources

HireRight

HireRight

HireRight is a leading provider of on-demand employment background checks, drug and health screening, and electronic Form I-9 and E-Verify solutions that help employers automate, manage and control background screening and related programs.

More Posts

Follow Me:
TwitterFacebookGoogle Plus

Comments

comments

Comments are closed.