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Asking About Salary is Not Only Rude, It May Be Illegal

Most people agree that it is pretty tacky to ask someone how much they earn, at least in social situations. We usually don’t bat an eye when a prospective employer asks us how much we earned in our old job. In fact, many applications for employment ask for a complete salary history. That may be about to change.

In a few weeks, New York City will join three states (Massachusetts, Delaware and Oregon) and one other major city (Philadelphia) in banning employers from asking prospective candidates about their salary history. A similar law will go into effect in California at the beginning of 2018.

These laws hope to reduce the historical disparity in pay between men and women on the premise that if a woman’s prior salary was caused by discrimination, that discrimination will persist if any subsequent employer is influenced by that salary when setting a salary for the newly hired employee.

Employers in each of these jurisdictions will need to remove any questions about salary history from their applications for employment. Additionally, anyone who is involved in the hiring process — e.g., human resources, managers, or any employee who might be asked to interview a new candidate — will need to be instructed about these new laws, which in some cases could result in steep penalties.

Some of these laws list circumstances where salary may be discussed or relied upon when making salary determinations. In the New York City law, for example, an employer will still be able to engage in a discussion with an applicant about their expectations with respect to salary and discuss any bonuses or unvested equity that they may be forfeiting if they leave their former employer. Most of these laws also allow an employer to consider an employee’s salary if the employee voluntarily discloses their salary without any prompting from the employer, but I would be very careful here because the applicant could later deny that the disclosure was voluntary.

For those employers who do not have operations in states or cities with these “fair hiring” laws, you may continue to ask candidates about their salary histories. However, don’t get too comfortable. Employers are increasingly facing lawsuits under Title VII and the Equal Pay Act alleging they have been paying women less than men for performing the same work. If there is a possibility of disparity in your workplace you may want to determine whether it has been caused by reliance on prior salary histories.

This information is provided by Vinson & Elkins LLP for educational and informational purposes only and is not intended, nor should it be construed, as legal advice.