Proposed Regulations Would Target Salary History Discrimination by Federal Contractors

New Jersey employment law prohibits employers from screening job applicants based on their salary history. Employers also may not require applicants to provide salary history information. The law helps job seekers overcome historical disparities in pay. It requires employers to base new hires’ pay on the market rate for their labor rather than their previous salary or wages. The law includes an exception for situations where a federal law or regulation requires job applicants to disclose salary history, or employers to verify that information. This exception might not be an issue much longer for many situations governed by federal law. In January 2024, the Federal Acquisition Regulatory (FAR) Council published proposed regulations in the Federal Register that would prohibit federal contractors from asking job applicants for salary information or using salary history to screen applicants.

A 2019 New Jersey law addresses how employers may use salary history during the hiring process. Employers may not require applicants to provide information about past wages or salary. They may not use that information in hiring decisions. If, however, an applicant provides such information voluntarily, “without employer prompting or coercion,” the employer may consider that information when determining that individual’s “salary, benefits, and other compensation.”

Employers who violate the 2019 law may face civil penalties, payable to the state, that start at $1,000 for a first violation. A second violation carries a $5,000 fine, and a third may result in a $10,000 fine. If a job applicant is part of a protected group under the New Jersey Law Against Discrimination, they may also have the right to sue for violations of the salary history law.

The FAR Council consists of the heads of several federal agencies: the Department of Defense, the General Services Administration, NASA, and the Office of Federal Procurement Policy. It helps manage procurement policy for the entire federal government. This includes overseeing the Federal Acquisition Regulation (FAR), which applies to all federal procurement activities. The new proposed regulation would impose a “compensation history ban[] [and] compensation disclosure requirement[]” for all federal contractors.

The main purpose of the proposed regulation is to “promote economy, efficiency, and effectiveness” in federal procurement. Closing pay gaps, according to the FAR Council, “leads to increased worker satisfaction, better job performance, and overall increased worker productivity.” Requiring transparency about salary and wages “promote[s] economy, efficiency, and effectiveness in recruitment and retention.”

The regulation’s prohibition on the use of salary history in hiring is similar to the one found in New Jersey law. It prohibits screening of applicants based on past pay. Each contracting agency is responsible for investigating alleged violations by contractors. They may refer cases to the Department of Labor if they allege certain types of discrimination, such as disability discrimination in violation of § 503 of the Rehabilitation Act of 1973.

If you believe your employer’s unlawful workplace practices have harmed you, you have rights under federal and state law. The Resnick Law Group’s team of skilled and experienced employment attorneys advocates for workers and job seekers in a wide range of legal claims in New Jersey and New York. To schedule a confidential consultation with a member of our team, please contact us today online, at 973-781-1204, or at 646-867-7997.

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