On July 25, 2019, Lieutenant Governor Sheila Oliver executed Bill A1094, which will significantly impact employer hiring processes. The law, which takes effect on January 1, 2020, prevents New Jersey employers from inquiring into job applicants’ salary histories. Once enacted, the law will prohibit employers from asking a prospective candidate about salary, commission or benefit history during the hiring process. New Jersey employers will also be banned from screening a job applicant based on salary history and/or requiring that an applicant’s salary history satisfy minimum or maximum criteria. Employers who violate the law will face civil penalties in an amount not to exceed $1,000.00 for the first violation, $5,000.00 for the second violation, and $10,000.00 for each subsequent violation thereafter.
The law does not prohibit employers from confirming a prospective employee’s salary history (pursuant to written authorization) upon extending an offer of employment to the candidate. Further, the law does not apply to employers who are expressly required to request such information during the hiring process pursuant to federal law or regulation. Hiring processes concerning current employee applications for internal transfers or promotions are also excluded from the law’s requirements. Moreover, the law does not prohibit employers from acquiring information concerning a prospective employee’s compensation history via publicly-available means, but the employer should not retain or consider such information in determining the applicant’s compensation.
Employers who wish to use a standard employment application for hiring in New Jersey and jurisdictions that allow salary inquiries should make clear that prospective New Jersey employees should not answer the salary history questions. In addition, employers should take steps to avoid disclosure of salary history in conducting background checks and communicating with employment agencies during the hiring process. Notably, candidates can voluntarily provide information concerning compensation history to a prospective employer, but employers are prohibited from considering an applicant’s refusal to volunteer such information in employment decisions.
New Jersey is one of several states to pass legislation banning compensation inquiries during the hiring process. The New Jersey Law Against Discrimination was amended to comport with these new requirements. As with the continued passage of employee friendly legislation, expect an increase in employment-related claims. Once enacted, employers may be subject to additional causes of action pursuant to New Jersey employment-related statutes that award prevailing parties attorneys’ fees and punitive damages under certain circumstances. Consequently, New Jersey employers should proactively update hiring practices by training hiring personnel in accordance with these new requirements. Taking such preventative steps, at this early juncture, can help avoid or minimize anticipated risks.