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Connecticut Poised to Ban Salary History Inquiries

Joining several other states including New York, New Jersey, and Massachusetts, Connecticut is set to enact legislation banning salary history inquiries by employers or their agents.  The General Assembly passed the measure and Governor Malloy is expected to sign it into law with an effective date of January 1, 2019.

The move is part of a trend among several states and municipalities to remove a barrier to gender-based pay equity.  Asking an employee’s salary history, the reasoning goes, allows employers to further entrench gender-based pay disparities by continuing a prior employer’s gender discrimination.  For example, if an employer makes it a practice to hire new employees at 10% above their prior salary in order to lure new hires, an applicant earning $70,000 at a prior job would be hired at $77,000 and an employee earning $80,000 at the prior job would be hired at $88,000 for the same work.  While prior salaries of applicants can vary for many factors other than gender, the aim of legislation like this is to eliminate the echoes of prior employers’ gender discrimination.

There are a few limitations on the ban:

  • It does not apply to any actions taken by an employer, employment agency, or employee or agent thereof pursuant to any federal or state law that specifically authorizes the disclosure or verification of salary history for employment purposes;
  • It does not apply if the prospective employee has voluntarily disclosed salary history; and
  • It does not apply to inquiries about other elements of a prospective employee’s compensation structure, as long as the employer does not inquire about the value of the elements of such compensation structure.

Significantly, nothing in the legislation prohibits employers from asking prospective employees about their salary requirements.  In other words, employers may not be permitted to ask what a prospective employee made at his or her old job, but can still ask what salary the prospective employee requires in order to accept the position in question.

In addition, the legislation does not prohibit employers from using salary history in setting compensation, so in theory, if an applicant voluntarily discloses his or her prior salary, it would be permissible to set pay based on it.  However, a recent case from the Ninth Circuit Court of Appeals, Rizo v. Yovino,held that salary history can never be a legitimate basis to pay women and men differently for the same work under the federal Equal Pay Act, so to avoid the possibility of inadvertent gender-based differentials in pay, it is best to avoid using salary history as well.

Under the Connecticut legislation, employers can be liable for compensatory damages, attorney’s fees and costs, punitive damages, and any legal and equitable relief the court deems just and proper.

Is this legislation constitutional?  Recently, a salary history ban enacted in Philadelphia was partially enjoined by a federal judge on the basis that it violates the First Amendment’s free speech clause.  The judge determined that the portion of the ordinance banning the employer from using the information to set pay was valid, but blocked the portion allowing the employer to ask about the information.  Thus, it will be interesting to see whether Connecticut’s legislation (which only bans inquiries and not use) will be challenged on constitutional grounds.

Unless and until such a challenge is successful, employers in Connecticut should prepare to comply.  Employers should remove any questions about salary history from their employment applications and any screening instruments that may be used by third party agents, such as recruiting firms.  Employers should also instruct anyone conducting interviews on their behalf not to inquire about salary history.  In addition, when setting compensation, employers should ensure that any differences in compensation among employees performing the same work can be justified by factors other than sex or prior salary.  Legitimate job-related factors can include amount of experience, level of education, ability, and job performance.

Our team of labor and employment attorneys can assist employers with all aspects of employment law compliance, including the onboarding process and avoiding discrimination claims.  Contact us for assistance in addressing any compliance concerns.