Asking Applicants about Salary History Now Banned in Massachusetts and Vermont, Connecticut Soon to Follow

Effective July 1, 2018, Massachusetts and Vermont became the first New England states to prohibit employers from inquiring into or seeking prospective employees’ salary history. Connecticut will soon follow when its salary history ban goes into effect on January 1, 2019. Maine, New Hampshire, and Rhode Island have considered or are considering similar measures.

There are a few other non-New England states (e.g., California, Delaware, Hawaii, and Oregon) and localities (e.g., New York City, NY; Philadelphia, PA; San Francisco, CA; Westchester County, NY) that have also adopted salary history bans. The goal of a salary history ban is to reduce the pay gap between men and women who are doing equal or comparable work. With growing attention to the seemingly intractable pay gap between men and women, we are likely to see more cities and states jumping into the fray.

Key Provisions

Prohibition. Connecticut, Massachusetts, and Vermont laws prohibit all employers from inquiring about or seeking information regarding an applicant’s current or past salary history either from the applicant, or from their current or former employer. In addition, Massachusetts and Vermont laws prohibit employers from requiring that an applicant’s current or prior salary history meet certain criteria. Vermont law also prohibits employers from determining whether to interview an applicant based on the applicant’s current or past compensation.

Exceptions. All three states provide limited exceptions to the general salary history ban. Massachusetts law allows employers to confirm prior salary or allows an applicant to confirm prior salary: (a) if an applicant has voluntarily disclosed such information; or (b) after an offer of employment with compensation has been negotiated and made to the applicant. Connecticut law allows employers to inquire about salary history if an applicant has voluntarily disclosed such information. Vermont law provides a similar, but somewhat more limited, exception such that when a prospective employee has voluntarily disclosed wage or salary history, an employer may, after making an offer of employment with compensation to the applicant, seek to confirm or request that the applicant confirm that information.

Under Connecticut law, an employer may inquire about other elements of an applicant’s compensation structure, as long as such employer does not inquire about the value of the elements of such compensation structure. Connecticut law also permits inquiries about salary history information if a state or federal law requires or specifically authorizes an employer to verify an applicant’s past income.

Salary Expectations. Guidance issued by the Massachusetts Attorney General’s Office makes clear that employers are permitted to ask an applicant about his or her compensation needs or expectations. However, the Guidance also provides that employers should proceed with caution when asking such questions and ensure that such questions are not framed or posed in a way that is intended to elicit information from the applicant about his or her salary or wage history. Vermont law explicitly states that employers are permitted to inquire about an applicant’s salary expectation or requirements. Connecticut law does not specifically address this issue.

Salary History and Pay Disparities

All New England states and the federal Equal Pay Act require equal pay between men and women. Under state and federal law, pay differentials are permitted based on certain statutory factors (e.g., a seniority system, a merit system). Importantly, current or past salary history is not one of the statutorily enumerated permissible factors for pay disparity in any state or under federal law. That said, Connecticut, New Hampshire, Rhode Island, Vermont, and the federal Equal Pay Act all provide a catch-all permissible factor, which allows pay disparities based on any factor other than sex. To fall within this exception, a factor must not be based on or derived from sex and must be related to the job and consistent with business necessity. Importantly, the U.S. Court of Appeals for the Ninth Circuit has recently held in an en banc decision that prior salary does not constitute a “factor other than sex” under federal law and prior salary, whether considered alone or with other factors, is not job related and thus cannot justify a wage differential between male and female employees. Rizo v. Yovino, 887 F. 3d 453 (9th Cir. 2018).

In any event, Massachusetts does not recognize this catch-all factor. Therefore, if you have had a practice of relying on an applicant’s prior salary in determining starting salary – it is time to rethink that approach in Massachusetts. The Massachusetts Equal Pay Act explicitly states that an employee’s previous wage or salary history shall not be a defense to a violation of the law.

Action Items

To comply with the salary history ban in Massachusetts and elsewhere, we recommend the following:

• Review and revise, if necessary, hiring documents (e.g., job applications) to ensure that such documents do not include a question about wage or salary information from current or previous employment. It is generally permissible to ask for desired salary.
• Ensure that all applicants know that they are not required to disclose salary history; add a statement to your job application, career landing page, and/or job posting.
• Train personnel involved in the hiring process on restrictions imposed by these new laws.
• Take a fresh look at your current compensation practices to comply with the salary history ban and equal pay requirements.

If you have questions about these new laws, equal pay law, or any other employment law, please contact Suzanne W. King at sking@pierceatwood.com or 617.488.8159 or Soyoung Yoon at syoon@pierceatwood.com or 617.488.8129.