A part of the hiring process for many employers involves asking applicants about their prior salary and compensation information. Employers might use this information in deciding whether to make an offer to a particular candidate and the amount of compensation to offer the potential employee. However, beginning January 1, 2020, employers in New Jersey will no longer be permitted to request this information.

The new law prohibits New Jersey employers from inquiring into an employee’s salary history before making an offer; using salary history to “screen” an applicant; or requiring an applicant’s salary history to meet any minimum or maximum criteria. Employers also cannot use an applicant’s refusal to volunteer compensation information as a factor in any employment decision. There are certain exemptions, including internal applicants and disclosures required by federal law.

If a candidate volunteers his or her salary history, without prompting or coercion from the employer, then the employer can consider the information. The law also permits an employer to verify such information if voluntarily disclosed and to request a written authorization to verify prior salary history after an offer is made and compensation details are communicated.

Even if the candidate works in a job where the salary history is publicly available, the employer cannot “retain or consider” that information when determining the salary, benefits or other compensation, unless the information is voluntarily disclosed by the candidate.

Violations can subject an employer to fines of up to $1,000 for the first violation, $5,000 for the second, and $10,000 for subsequent violations.

The law also amends the New Jersey Law Against Discrimination (NJLAD) to provide a cause of action for individuals in a protected class if a potential employer screens the job applicant based on prior salary history or requires the applicant to meet minimum or maximum salary history information. Importantly, unlike other claims under the NJLAD, neither attorneys’ fees nor punitive damages are available for such a violation.

As a result of this change in the law, New Jersey employers should review their job applications, adjust their hiring procedures, and train employees involved in recruitment and hiring. If you have any questions or require assistance with this process, an experienced Reed Smith labor and employment attorney is available to assist.