In Connecticut, effective January 1, 2019, an employer must now refrain from asking (directly or through a third party) about a prospective employee’s wage and salary history unless the prospective employee volunteers the information.
The ‘Act Concerning Pay Equity’ was signed on May 22, 2018, in an effort to prevent employers from basing a prospective employee’s salary on past earnings. Several states have enacted similar legislation.
The new law applies to employers with as few as only one employee.
Prospective employees include any individual who submits a job application or is interviewed by an employer.
In addition to prohibiting inquiries about wages, which include rates for tasks or piece work and commissions, employers may not ask a prospective employee about the value of other elements of the individual’s compensation structure. An employer may ask what other components comprise a prospective employee’s compensation structure, as long as there is no inquiry about the value.
If a state or federal law requires or specifically authorizes an employer to verify a prospective employee’s past income, then and only then can the employer ask about salary history.
The statute provides prospective employees the right to bring a claim against an employer in court. A prospective employee has two years after the alleged violation to bring a claim, including for compensatory damages, attorney’s fees and costs, punitive damages, and possibly other legal and equitable relief.
Accordingly, employers should not only not ask about wages or salary history or the value of other compensation such as bonuses, stocks, or equity during the interview or hiring process, they should review their job application forms to make sure they do not request wage or salary information from previous employers.
Employers using metrics, such as books of business, revenue, or sales history, in hiring should be careful to ensure that there is no corresponding valuation.
Employers in certain industries should be especially cautious during the application process. Those that hire salespeople, for example, likely will be particularly affected. Similar laws in other jurisdictions, such as New York City, have been careful to exclude measures of the applicant’s productivity (e.g., revenue, sales, and other production reports) from their prohibition, whereas Connecticut’s statute does not clearly provide such an exemption.
If you have any questions or concerns about these developments or your specific business needs, give us a call.