Will Salary History Bans Eliminate the Gender Pay Gap?

On October 6, 2017, Oregon became the first state to ban public and private employers from asking prospective employees about salary history. Seeking to expand upon the Oregon Equal Pay Act, which prohibits employers from discriminating through wages and other compensation based on gender, the new law bans employers from (a) screening job applicants based on current or past compensation, (b) determining compensation for a position based on current or past compensation of a prospective employee, and (c) asking job applicants about their salary history or seeking it from other employers. The Oregon law also does not allow an employer to confirm salary history before an offer of employment, even if the applicant voluntarily discloses the information. However, it allows an employer to confirm prior compensation after the employer makes an offer of employment that includes compensation, so long as prior authorization is obtained. The aim of this law, and others being passed throughout the country, is to eliminate or, at the very least, narrow the pay gap that exists between genders, races, and other protected classes.

Proponents of salary history bans contend that inquiring about wage history perpetuates the existing gap in wages between genders because prior wages would serve as the basis for setting the compensation for the current position. They argue that the responsibilities of a position should instead determine the appropriate compensation.

Here in Pennsylvania, women are paid 79 cents for every dollar a man earns, per a 2015 Census Bureau report. For women of color, the pay gap is even wider. Both Philadelphia and Pittsburgh have passed laws with the goal of narrowing this gap. The Philadelphia ban prohibits employers from relying on salary history in determining compensation for new employees unless the employee “knowingly and willingly disclosed his or her wage history.” However, the law contains an exemption that allows employers to ask candidates about compensation history when federal, state or local laws allow for the verification of salary. Philadelphia’s ban was supposed to go into effect on May 23, 2017, but a judge temporarily halted its implementation after the City’s Chamber of Commerce filed a lawsuit arguing that that ban violates employers’ free speech rights and makes it harder for companies to set wages and attract top talent. In Pittsburgh, the City Council passed a bill prohibiting the City from asking about previous salary. It was signed into law by Mayor Bill Peduto on January 30, 2017.

Several other states and cities have passed similar laws, such as Massachusetts, Delaware, California, New York, New York City, and New Orleans. Delaware’s ban will take effect on December 14, 2017. California’s state-wide ban was passed after San Francisco’s “Parity in Pay” Ordinance, which will become effective on July 1, 2018. California’s ban will become effective on January 1, 2018. In Massachusetts, which was the first jurisdiction to pass a ban in August 2016, the law will not become effective until July 1, 2018. New York Governor Andrew Cuomo signed Executive Order No. 161 on January 9, 2017, which prohibits state entities from inquiring about or relying on a job applicant’s salary history until a conditional offer of employment has been made. A similar bill applicable to private employers is currently being debated by the New York State Assembly. New York City’s ban, applicable to all employers, became effective on October 31, 2017. New Orleans’ law, like Pittsburgh’s, forbids city agencies from asking about prior salary history. It became effective on January 25, 2017. New Jersey and Illinois both passed similar salary history ban legislation, but the legislation was vetoed by the governors of those states.

As enforcement and penalties for violating these laws differ between jurisdictions, it will undoubtedly take time to determine whether these efforts will reduce the gender pay gap. In the meantime, employees in the jurisdictions mentioned above should be aware of their rights, and of the new restrictions placed on employers when it comes to asking for salary history information.

People