Can I ask Job Applicants About Their Compensation History?

Date: August 17, 2017

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Recently NFIB Small Business Legal Center joined with the U.S. Chamber of Commerce in challenging Philadelphia’s controversial ordinance prohibiting employers from making inquiries into a job applicant’s pay history. As explained here, these restrictions are highly suspect under the First Amendment because they regulate free speech. But while we wait to see whether the courts will invalidate Philadelphia’s ordinance, other jurisdictions are rushing to implement similar policies. For example, Delaware, Massachusetts and Oregon all now prohibit certain inquiries into pay history. Likewise, New York City and San Francisco have enacted similar prohibitions.

The reality is that we can expect to continue to see these trends in “blue” jurisdictions across the country until courts begin to strike-down these enactments. And if the courts take divergent views, with some upholding prohibitions on pay history inquiries and others invalidating these laws, the issue may percolate for quite a while in the courts. In the interim, it’s advisable for small business owners to comply with local or state enactments to avoid potential penalties or costly lawsuits.

What questions should you be asking of job-applicants?

Regardless of your jurisdiction, its generally advisable to ask only questions that shed light on a job applicant’s capacity to perform the essential functions of the vacant position. For example, you might ask questions about:

• The candidate’s relevant experience;
• How the candidate performs under certain conditions; and
• Whether the candidate is capable traveling or performing other essential tasks.

But questions about past wages and salary are also generally relevant when you are trying to select the right candidate, and where you wish to make a competitive offer to bring in top-talent. So, in the absence of an express statutory prohibition (either at the state or local level) its generally acceptable ask these questions:

• Are you currently paid a set salary or on an hourly basis?
• What was your salary or hourly rate in your last three positions?
• Can you explain your current commission structure?
• Did you receive an annual bonus last year?
• What kind of “paid time-off” policy does your current employer offer?

What questions should you avoid?

As always, it’s advisable to avoid questions that bear no significance to the candidate’s potential to carry out the essential functions of your vacant position. And you should especially avoid any question that might lead to an inference that you are taking into account improper considerations, or which may otherwise reveal whether the applicant is a member of a protected class. For example, you should avoid questions like:

• Do you have any medical conditions that would interfere with your ability to perform this job?
• Have you ever been treated for drug abuse?
• Have you ever been arrested?
• Are you taking any prescription drugs?
• Have you ever been a member of a union?
• Do you have small children?
• Have you ever filed for workers’ compensation?

But although there is nothing invidious about considering a job applicants compensation history, a handful of jurisdictions now prohibit questions along these lines as well. The assumption is that these prohibitions may somehow close the wage gap between men and women, or otherwise level the playing-field for historically disadvantaged classes. Accordingly, when beginning a search to fill a vacant position it is advisable first to check to see whether your jurisdiction prohibits inquiries into compensation history.

Unfortunately, the details of the prohibition will vary with each enactment. So, if you are in a state or locality that now bans inquiries into an applicant’s compensation history, you should check whether the restrictions in your jurisdiction prohibits employers from:

• Asking whether an applicant is currently employed;
• Making inquiries about workplace benefits, as well as inquiries about an applicant’s monetary compensation;
• Researching publicly available information about salary bands at an applicant’s place of employment;
• Screening applicants based on compensation history where the employee has voluntarily disclosed past salary or wages;
• Discussing and negotiating salary expectations;
• Confirming an employee’s compensation history after an offer has been made.

As always, it’s better to be safe than sorry. So if you are unsure how to proceed it may also be advisable to consult a trusted employment law attorney in your state.

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