Blog

 
     

A Mid-Year Compliance Report: Pay Equity Laws

By Michael Klazema on 7/28/2020

Last week, we explored some of the legislation and compliance changes that have occurred so far in 2020 in the ban the box space. This week, we’re continuing our mid-year compliance report with a glimpse at additional regulations that employers must be aware of: pay equity and salary history laws. 

In the past, it hasn’t been uncommon for employers to inquire about salary histories when vetting new job candidates. Sometimes, candidates have been asked to self-report their past salary amounts as part of the “employment history” section of a job application. In other situations, hiring managers might ask about salary history as part of an employment history verification check—a background check that also incorporates questions about job titles, work responsibilities, and employment dates.  

Pay equity laws, or salary history bans, are noteworthy for employers because they prohibit these inquiries. These laws may directly affect your organization’s job applications or background checks. 

Why are pay equity laws becoming more common in the United States? These laws are intended to help close the salary gaps between men and women, whites and minorities, and other groups by stopping employers from basing salary decisions on how much money a candidate made at a previous job.  

It has become a common criticism in recent years that looking at candidate salary histories either consciously or unconsciously perpetuates pay discrepancies and prevents women or minorities from being paid as much for a job as a white male. Pay equity laws are intended to fix this problem by barring employers from using salary history checks to decide on a salary to offer a candidate. 

A few states, cities, and jurisdictions that have implemented pay equity measures in 2020: 

  • New York. New York’s salary history ban has been on the books since 2017, so this pay equity law isn’t new, but it received an amendment this year. The amendment clarifies that the law—which bars employers from asking about a candidate’s salary history—applies to situations in which employers are based outside of New York but are hiring people to work within the state. The new version of the law has been in effect since January. Despite the amendment, the law still does not apply to workers who are not considered “employees,” such as freelancers and independent contractors.
     
  • Maryland. Maryland also amended an existing pay equity law recently, adding provisions that require employers to provide candidates with a wage range for each job that they post. The law also prohibits employers from retaliating against job applicants who ask for a wage range for a job. The amendments kick in on October 1.
     
  • Philadelphia. Philadelphia has a pay equity law that dates back to 2017. Since the law was first passed, it has faced some legal challenges for allegedly being an unconstitutional limitation on the practice of free speech. Those challenges put a lengthy delay on how the law can be enforced, but the ordinance has been upheld by a United States appellate court. The law makes it illegal for any Philadelphia employer to ask prospective employees about their wage history or use salary history information “in setting or negotiating” wages. The ordinance officially went into effect on June 5.
     
  • Toledo. Starting on June 26, employers in Toledo, Ohio are barred from including inquiries about salary history in the candidate screening process. Employers are not allowed to consider wage history information when extending a job offer or making a hiring decision, and they must present wage ranges for all jobs. 

As you can see, salary history bans can impact everything from job listings to employment applications to background checks to the conversations you have with candidates about compensation and benefits. Just as it is critical to follow the FCRA to the letter to avoid lapses in compliance, it’s vital to read these laws thoroughly and update your policies if you are hiring candidates in affected locations. 

At backgroundchecks.com, we can help by excluding wage history from our very thorough employment verification screenings. Contact us today to learn more

Sources: https://www.forbes.com/sites/alonzomartinez/2020/07/10/what-employers-might-have-missed-in-the-first-half-of-2020-from-ban-the-box-laws-to-marijuana-measures-a-midyear-compliance-update/#6c60900561a6

 


Tag Cloud
Categories
Recent Posts

Latest News

  • July 30 A website used for hiring temporary household workers settled with California prosecutors who said the business misrepresented the types of background checks it offered to consumers.
  • July 29

    As the economy recovers from the blow struck by COVID-19, many employers and staffing agencies are getting back to hiring and recruitment. Here are some of the ways in which the pandemic has shifted recruiting—perhaps forever.

     

  • July 28

    Pay equity laws bar employers from asking candidates about salary history—a measure intended to help end the pay discrepancies that women, minorities, and other classes face. Here’s what to know about the pay equity laws that have gone into effect in 2020. 

  • July 23 With COVID-related disruptions likely to continue indefinitely, few unemployed individuals have the option of waiting for a better job market. What should job-seekers keep in mind? 
  • July 22 Hiring has become a significant challenge for many employers, in part due to higher-than-usual unemployment payments. Here’s how employers can not only find candidates but also fast-track their hiring processes during the pandemic. 
  • July 21

    While COVID-19 has held the attention of most employers, hiring-related laws and ordinances have continued to pass the legislature or go into effect. Here are the latest developments in ban the box legislation.

  • July 16 With the Georgia legislature's recent approval of a new Second Chance bill, nonviolent felons may soon have more opportunities. The state joins a growing list of areas offering greater access to expungement.
  • July 15 As the United States regains lost jobs, many businesses are unfreezing their hiring. Here’s why employee background checks are even more critical at this stage than they were before COVID-19.
  • July 14

    60 percent of colleges and universities want to resume all in-person learning this fall, but professors are pushing back. Will the debate lead to a staffing shortage in the higher education sector?

  • July 09 While investments into the technology that employees use to perform daily work are essential, tools for HR matter immensely. Explore the difference that they can make.