Last April, New York City passed legislation banning employers from asking applicants what they currently earn or what they made in their prior job. The legislation also prohibits employers from conducting public records searches regarding pay history for applicants. Massachusetts became the first state in the nation to ban such inquiries in August of 2016, and Puerto Rico and Philadelphia passed similar legislation earlier this year. Additionally, more than 20 other city and state legislatures have proposed legislation to this effect, reflecting a growing national trend.
The legislation aims to decrease payment inequality issues. The concern is that if an applicant is underpaid at one job, it could lower their earning potential throughout their career. The legislation is specifically intended to improve gender wage inequality issues.
Maryland proposed similar legislation in 2017. The legislation overwhelmingly passed in the House of Representatives, but ultimately received an unfavorable committee report in the Senate. However, in light of this national trend, it is very possible that legislation to this effect may be proposed in the near future. Maryland’s “Equal Pay for Equal Work Act,” which went into effect on October 1, 2016, already prohibits employers from discriminating between employees by paying or promoting employees differently based on sex or gender identity.
The passage of this legislation also may impact regional and national employers if they have employees in New York City, Philadelphia, or Massachusetts. It is possible that many companies who hire in areas that have passed equal pay laws may cut out prior earnings questions from their application process entirely.
Critics of this legislation argue that it impedes business growth and violates a company’s First Amendment rights. Proponents of the legislation argue that it does not ban all discussions of compensation. Therefore, employers could still ask applicants about their compensation expectations for the role they are applying for.
Interestingly, amidst this national trend, the Ninth U.S. Circuit Court of Appeals just ruled that employers can legally pay women less than men if the basis for the salary is the woman’s prior wage history. The underlying case that was presented before the Ninth Circuit was not related to specific legislation attempting to prevent such hiring practices. Therefore, the ruling does not necessarily serve to overturn legislation that has passed since the case arose.