Written By ESR News Blog Editor Thomas Ahearn
On June 26, 2019, the City of Toledo, Ohio approved Ordinance 173-19 or the “Pay Equity Act to Prohibit the Inquiry and Use of Salary History in Hiring Practices in the City of Toledo” to prohibit employers from inquiring about the past salary history of job applicants during the hiring process to ensure pay equity.
The Act defines “salary history” as an applicant’s current or prior wage, benefits, or other compensation. Toledo’s Pay Equity Act – which is scheduled to take effect on June 25, 2020 – will make it an unlawful discriminatory practice for employers with fifteen or more employees in the city of Toledo to:
- Inquire about the salary history of an applicant for employment.
- Screen job applicants based on their current or prior wages, benefits, other compensation, or salary histories, including requiring that an applicant’s prior wages, benefits, other compensation or salary history satisfy minimum or maximum criteria.
- Rely on the salary history of an applicant in deciding whether to offer employment to an applicant, or in determining the salary, benefits, or other compensation for such applicant during the hiring process, including the negotiation of an employment contract.
- Refuse to hire or otherwise disfavor, injure, or retaliate against an applicant for not disclosing his or her salary history to an employer.
The intent of the Pay Equity Act is to make employers base job wages on responsibilities and experience and not on past salary to ensure equal pay for equal work by prohibiting them from requesting the salary history of job applicants. However, the prohibitions contained in the Act shall not apply to:
- Any actions taken by an employer pursuant to any federal, state, or local law that specifically authorizes the reliance on salary history to determine an employee’s compensation.
- Applicants for internal transfer or promotion with their current employer.
- A voluntary and unprompted disclosure of salary history information by an applicant.
- Any attempt by an employer to verify an applicant’s disclosure of non-salary related information or conduct a background check, provided that if such verification or background check discloses the applicant’s salary history, such disclosure shall not be relied upon for purposes of determining the salary, benefits, or other compensation of such applicant during the hiring process, including the negotiation of a contract.
- Applicants who are re-hired by the employer within five years of the Applicant’s most recent date of termination from employment by the employer, provided that the Employer already has past Salary History data regarding the Applicant from the previous Employment of Applicant.
- Employee positions for which salary, benefits, or other compensation are determined pursuant to procedures established by collective bargaining.
- Federal, state and local political subdivisions, other than the City of Toledo.
Applicants will have a private cause of action to enforce the provisions of the Pay Equity Act against employer failing to comply with any provision of the Act and shall have a private cause of action to enforce the provisions of the Act against employers for compensatory damages, fees, and costs of the action.
Studies show that basing a worker’s salary offer on salary history can perpetuate the current wage inequity between the sexes. Women in the United States are paid 80 cents for every dollar paid to men, losing out on a combined total of more than $840 billion annually, according to a summary of the Act.
Toledo is the second city in Ohio to pass a salary history ban. On March 13, 2019, Cincinnati passed Ordinance No 0083-2019 to prohibit employers from asking job applicants about their salary history or current earnings. The ban will take effect one year from the date of the passing of the ordinance.
States with salary history bans include California, Connecticut, Delaware, Hawaii, Illinois Massachusetts, Michigan, New Jersey, New York, Oregon, Pennsylvania, Vermont, and Wisconsin. Cities with similar laws include Chicago, Kansas City, Louisville, New Orleans, New York City, Philadelphia, Pittsburgh, and San Francisco.
Laws prohibiting employers from seeking salary history information about applicants will increase as the pay equity movement grows and this trend was chosen by leading global background check firm Employment Screening Resources® (ESR) as one of the “ESR Top Ten Background Check Trends” in 2019.
“If new pay is based on previous pay, the gender pay gaps are perpetuated. The goal of such laws is to base compensation on the work performed and not on reliance on previous pay that may reflect gender discrimination,” said ESR founder and Chief Executive Officer (CEO) Attorney Lester Rosen.
“When an employer has a background screening firm perform past employment verifications, it is critical that firm knows which states and cities prohibit such questions as well as software that facilitates compliance or else that employer could be fined,” said Rosen, author of “The Safe Hiring Manual.”
Employment Screening Resources® (ESR) – a leading global background check firm – offers primary source employment verifications that comply with state and local salary history laws that help ensure pay equity. To learn more, visit www.esrcheck.com/Background-Checks/Verifications-References/.
NOTE: Employment Screening Resources® (ESR) does not provide or offer legal services or legal advice of any kind or nature. Any information on this website is for educational purposes only.
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