Delaware Governor John Carney signed a law enacting a pay history inquiry ban similar to those enacted in Massachusetts, New York City, Philadelphia, and Oregon. Its goal is to reduce pay gaps between genders, with the hopes of encouraging employers to proactively assess pay based on other gender-neutral factors, such as merit, experience, and the market.
What Can I Ask?
Delaware’s law prohibits an employer or its agent from “screen[ing] applicants based on their compensation histories, including by requiring that an applicant’s prior compensation satisfy minimum or maximum criteria.” It also prohibits an employer from requesting an applicant’s compensation history from the applicant or the applicant’s current or former employer. “Compensation” is defined broadly, and it includes wages as well as “benefits and other forms of compensation”.
The law does not specifically prohibit employers from setting compensation based on prior salary history if an applicant voluntarily discloses their prior compensation history. It also does not prohibit discussions about an applicant’s past compensation history if the applicant voluntarily discloses such information. Thus, you and the applicant can discuss and/or negotiate the applicant’s compensation as long you do not request or require information about the applicant’s pay history. You can request information on the applicant’s pay history once you have extended an offer of employment that includes specific compensation terms. The compensation information received from any such request can only be used to confirm the applicant’s compensation history.
What If I Use a Recruiter?
To alleviate concerns about liability when using third-party recruiters, Delaware’s law contains a provision absolving employers of liability under certain circumstances. Specifically, you will not be held liable for the acts of a non-employee agent if you can show that you notified the agent of the law’s requirements and instructed the agent to comply with the law.
What Are the Penalties for Violating the Law?
The Delaware Department of Labor (Department) is authorized to enforce the law and impose civil penalties for any violations of the law. The Department can impose a civil penalty of no less than $1000 and no more than $5,000 for the first offense. Penalties for each subsequent offense can be anywhere from $5,000 to $10,000. The Department also has the authority to file a lawsuit against you.
Coverage: Employers with employees in Delaware.
Effective: December 2017
Action Required: Employers should:
- Become familiar with the new obligations and potential penalties under the law;
- Review and revise existing applications, policies and practices;
- Review and revise, where necessary, the company’s processes for interviewing job applicants, negotiating and setting compensation, and verifying prior employment in order to ensure prohibited information is not solicited; and
- Contact your Human Resources Business Partner with any questions you may have.
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This content provides practical information concerning the subject matter covered and is provided with the understanding that ADP is not rendering legal advice.
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