Oregon, Delaware and San Francisco Salary History Restrictions

Posted by: Accurate Background

November 30, 2017

The List of Jurisdictions Passing Pay Equity Laws Continues to Grow

Oregon, Delaware, and San Francisco have passed laws restricting the use of salary history in employment screening and decisions. These laws add to the list of jurisdictions who have passed similar legislation to restrict the use of salary history and promote pay equity.

Oregon

The Basics

  • Location: Oregon
  • Legislation: House Bill 2005
  • Type: Salary History
  • Effective: October 6th, 2017

Key Takeaways

  • Applies to employers with 1 or more employees in Oregon.
  • May not screen job applicants or determine compensation based on current or past compensation, or seek an applicant or employee’s salary history.
  • Compensation differentials must be based on a bona fide factor (listed below).
  • Employers must post a notice of the requirements where employees work. The Bureau of Labor and Industries will provide a template.

When does this go into effect?

The salary history restrictions went into effect October 6, 2017, however, most provisions of the Act become effective January 1, 2019.   These provisions include, but are not limited to, prohibiting employers from discriminating against employees based on a protected class and posting requirements. Beginning January 1, 2024, employees will have the right of private action against potential employers who have violated the salary history act.

Who does this effect?

The law applies to employers with 1 or more employees who render personal services wholly or partly in Oregon and are paid at a fixed rate.  There are additional qualifications when services are rendered only partly within Oregon.

What is prohibited in the law?

Employers or prospective employers may not seek salary history from an applicant or employee, or their current or former employer.  This is not intended to prevent an employer from requesting written authorization from a prospective employee to confirm prior compensation after the employer makes an offer of employment to them that includes an amount of compensation.  It is also an unlawful employment practice for employers to:
      • In any manner discriminate between employees on the basis of a protected class in the payment of wages or other compensation for work of comparable character (meaning substantially similar knowledge, skill, effort, responsibility and working conditions in the performance of work, regardless of job description or title).
      • Pay wages or other compensation to any employee at a rate greater than the employer pays employees of a protected class for work of comparable character.
      • Screen job applicants based on current or past compensation.
      • Determine compensation for a position based on current or past compensation of a prospective employee. This does not prevent consideration of compensation of a current employee during a transfer, move or hire to a new position with the same employer.

Are there any exceptions?

Yes, an employer may pay employees for work of comparable character at different compensation levels if all of the difference in compensation levels is based on a bona fide factor that is related to the position in question and is based on a seniority system; a merit system; a system that measures earnings by quantity or quality of production, including piece-rate work; workplace locations; travel, if travel is necessary and regular for the employee; education; training; experience; or any combination of the factors described above, if the combination of factors accounts for the entire compensation differential.

What other requirements impact employers?

Employers must post a notice of the requirements in every establishment where employees work. The Bureau of Labor and Industries will make a template available to employers that meets the required notice provisions.  The Act also outlines when unlawful practices occur and a timeframe for when violations may be reported.

Is there anything else employers can do for their organization to comply?

Employers may conduct an equal-pay analysis – an evaluation process to assess and correct wage disparities among employees who perform work of comparable character – which may help with an alleged violation.  In a civil action, the court shall grant an employer’s motion to disallow compensatory and punitive damages if the employer demonstrates, by a preponderance of the evidence, that they:
  • Completed, within 3 years before the date that the employee filed the action, an equal-pay analysis in good faith that was reasonable in detail and in scope in light of the size of the employer, and related to the protected class asserted by the plaintiff; and
  • Eliminated the wage differentials for the plaintiff and has made reasonable and substantial progress toward eliminating wage differentials for the protected class asserted by the plaintiff.
If the court grants the motion, the court may award back pay only for the 2-year period immediately preceding the filing of the action and may allow the prevailing plaintiff costs and reasonable attorney fees, but may not award compensatory or punitive damages.

Delaware

The Basics

  • Location: Delaware
  • Legislation: House Bill 1
  • Type: Salary History
  • Effective: December 14th, 2017

Key Takeaways

  • Employers and their agents may not screen applicants based on compensation history, or seek such history from the applicant or a current/former employer.
  • Compensation includes monetary wages as well as benefits and other forms of compensation.

Who does this effect?

The law affects employers and employers’ agents.

When does this go into effect?

Delaware’s law will go into effect December 14, 2017 (Delaware Code § 709B).

What is prohibited in the law?

An employer or employer’s agent may not screen applicants based on their compensation histories, or seek the compensation history of an applicant from the applicant or a current or former employer.

Are there any exceptions?

An Employer or employer’s agent may seek the applicant’s compensation history after an offer of employment with terms of compensation has been extended to the applicant and accepted, for the sole purpose of confirming the applicant’s compensation history.  The law also does not prohibit an employer or employer’s agent from discussing and negotiating compensation expectations provided that the employer or employer’s agent does not request or require the applicant’s compensation history.  Also, if an employer can demonstrate that their agent, who is not an employee, was informed of the requirements of the law and instructed to comply by the employer, then the employer is not liable for actions taken by the agent in violation of this section (for example, a staffing agency or recruiting company).

San Francisco

The Basics

  • Location: San Francisco, CA
  • Legislation: Ordinance 170350
  • Type: Salary History
  • Effective: July 1st, 2018

Key Takeaways

  • Applies to applicants applying for employment in the City and whose application will be solicited, received, processed or considered in the City.
  • May not inquire about applicant’s salary history, or consider or rely on salary history to determine an offer of employment or salary.
  • Employers must post a notice provided by OLSE where employees work.

Who does this effect?

The law applies to applicants applying for employment to be performed in the geographic boundaries of the City and whose application, in whole or part, will be solicited, received, processed or considered in the City.  An applicant does not include a person applying for employment with their current employer.

When does this go into effect?

San Francisco’s law will go into effect July 1, 2018 (Police Code § 33J; Administrative Code § 12K).

What is prohibited in the law?

An Employer shall not:
  • Consider or rely on an applicant’s salary history as a factor in determining whether to offer employment or what salary to offer;
  • Inquire, directly or indirectly, about an applicant’s salary history (which includes current and past salary in a current or prior position with a current or prior employer, but not any objective measure of productivity such as revenue, sales, etc.);
  • Refuse to hire, or otherwise disfavor, injure, or retaliate against an applicant for not disclosing salary history to the employer; or
  • Release the salary history of any current or former employee to that person’s prospective employer without written authorization from the employee, unless required by law, is part of a publicly available record, or is subject to a collective bargaining agreement.

Are there any exceptions?

Employers may, without inquiring about salary history, engage in discussion with the applicants about the applicant’s expectations with respect to salary, including but not limited to unvested equity or deferred compensation or bonus that an  applicant would forfeit or have cancelled by virtue of the applicant’s resignation from their current employer.If a verification of non-salary related information disclosed by the applicant, or background check, discloses the applicant’s salary history, the disclosed history shall not be considered for purposes of determining the salary offered or whether to offer employment.If an applicant voluntarily and without prompting discloses salary history, or provides written authorization, employers may consider that voluntarily disclosed history in determining or verifying salary.  Salary history by itself shall not justify paying any employee of a different sex, race or ethnicity less for substantially similar work under similar working conditions.

What other requirements impact employers?

Employers shall post a notice of the requirements in a conspicuous location, where required, and shall send a copy to each labor union or representative of workers with which the employer has a collective bargaining or other agreement that is applicable to employees in the City or on City property.  The notice shall be posted in English, Spanish, Chinese, and any language spoken by at least 5% of the employees at that location (multiple languages will be published by San Francisco’s Office of Labor Standards Enforcement OLSE).

Recommendations

We recommend reading each legislation in its entirety to determine the impact these may have on your organization, as well as review and discuss with your legal counsel your organization’s policies and procedures to ensure compliance with the changing laws.  Seyfarth Shaw has also provided overviews you may read regarding the new Oregon, Delaware, and San Francisco pay equity laws. Please note:  The information provided above is strictly for educational purposes.  It is not intended to be legal advice, either expressed or implied.  Accurate Background recommends that you consult with your legal counsel regarding all employment regulations.