Richards Layton & Finger
 

Proposed Law Prohibits Delaware Employers From Asking Applicants About Previous Compensation

April 27, 2017

This week the Delaware House of Representatives introduced an amended bill that would bar employers from asking applicants about their previous compensation history. The goal of House Bill No. 1 (H.B. 1) is to address the wage gap between men and women in Delaware. If H.B.1 is enacted, the new law would prohibit employers and their agents from seeking compensation history from applicants or from their current or former employers. Additionally, Delaware employers and their agents would be prohibited from screening applicants based on their past compensation, including by requiring that an applicant’s prior compensation satisfy certain minimum or maximum benchmarks. Notably, H.B. 1 allows for a good faith exception; specifically, if an employer can demonstrate that the employer’s agent was informed of the requirements and instructed to comply, then the employer would not be liable. “Compensation” includes monetary wages, benefits and all other forms of compensation.

This proposed legislation does not prohibit an employer from discussing and negotiating compensation expectations with an applicant, so long as the employer does not request or require an applicant to provide past compensation history. An employer, however, will still be allowed to inquire about an applicant’s compensation history after the applicant has accepted the job offer, including its terms of compensation, provided the applicant authorizes such disclosure in writing.

The proposed penalty for an employer who fails to comply is a civil penalty of between $1,000 and $5,000 for the first offense and between $5,000 and $10,000 for each subsequent violation. For penalty purposes, interviewing and hiring for a single job position constitutes only one violation.

H.B. 1 would apply to employers in Delaware with four or more employees. This bill builds on legislation passed by the 148th General Assembly that addressed the wage gap between men and women related to wage disclosure. Specifically, House Bill No. 314 made it unlawful for an employer to prevent an employee from discussing his or her wages or the wages of another employee. (19 Del. C. § 711).

Other cities and states have proposed or enacted similar legislation. Philadelphia enacted a law, which takes effect in May, prohibiting private-sector employers from asking applicants about their wage history. A Massachusetts ban on requesting or requiring prior wages or salary history from applicants for employment in the private sector will take effect in 2018. Additionally, New York recently prohibited state agencies from asking applicants about their current or prior compensation history.

If passed, H.B. 1 would take effect six months after its enactment, giving businesses time to adjust their hiring policies and practices in order to comply with the new law. We intend to provide updates on this bill as appropriate.

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