Richards Layton & Finger
 

Delaware Employers Can No Longer Ask Applicants About Compensation History

June 20, 2017

On June 14, 2017, Governor John Carney signed into law a bill (H.B. 1) that bars Delaware employers and their agents from asking applicants about their compensation history. The law’s goal is to address the wage gap between men and women in Delaware. 

In addition to prohibiting employers and their agents from seeking compensation history from applicants or from their current or former employers, the law prohibits Delaware employers and their agents from screening applicants based on their compensation histories, including by requiring that an applicant’s prior compensation satisfies certain minimum or maximum benchmarks. “Compensation” includes monetary wages, benefits and all other forms of compensation.

Notably, the law allows for a good faith exception: if an employer can demonstrate that its external agent, such as an independent recruiter, was informed of the requirements and instructed to comply, then the employer would not be liable if the external agent failed to comply with the new law. This exception does not apply to an employer’s own employees.

The law 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 compensation history. An employer, however, is allowed to inquire about an applicant’s compensation history after the applicant has accepted the job offer, including the prior terms of compensation, but only for the purpose of confirming compensation history.

Employers who fail to comply with this new law can be assessed a civil penalty by the Delaware Department of Labor (DDOL). A first violation will result in a civil penalty of between $1,000 and $5,000 and then 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.

The law applies to employers in Delaware with four or more employees and takes effect in December 2017, giving businesses time to adjust their hiring policies and practices in order to comply. The DDOL is required to post the requirements of this law on its website and perform education outreach for employers. In the next six months, employers should ensure that all employees and external recruiters responsible for interviewing and/or hiring are aware of this new law. Employers should also be sure to revise job applications, applicant questionnaires and other hiring documents to comply with the law.

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