House Passes Legislation to Restrict Employer Use of Wage History Information
On March 27th, the House of Representatives passed HR 7, the “Paycheck Fairness Act,” by a vote of 242 to 187. This bill includes several provisions intended to promote gender pay equity in the workplace.
Section 10 of the bill would amend the federal Fair Labor Standards Act (FLSA) to restrict the ability of covered employers to consider wage history information during the hiring process.
The bill would make it unlawful for covered employers to:
- Rely on the wage history of a prospective employee in considering the prospective employee for employment (including requiring prior wages to satisfy minimum or maximum criteria as a condition for being considered);
- Rely on the wage history of a prospective employee in determining the wages for the prospective employee (unless the prospective employee voluntarily provides wage information after the employer has made an offer of employment with an offer of compensation to support a higher wage than the employer offered);
- Seek the wage history of a prospective employee from the prospective employee or any current or former employer of the prospective employee (except that an employer may seek to confirm prior wage information voluntarily under the circumstances described in the prior bullet); or
- Discharge or in any way retaliate against any employee or prospective employee for opposing any act or practice prohibited above.
The bill would add new penalty provisions to the FLSA for violation of these requirements. Any person who violates the provisions of the new Section 8 would:
- Be subject to a civil penalty of $5,000 for a first offense, increased by $1,000 for each additional offense (up to a maximum of $10,000 per offense);
- Be liable to each employee or prospective employee who was the subject of a violation for special damages not to exceed $10,000 plus attorneys’ fees; and
- Be subject to injunctive relief as appropriate.
Actions could be brought on an individual or class basis in federal or state court.
The bill, while a priority in the Democratic House, is not expected to progress through the Republican-controlled Senate without substantial revision. The bill is, however, another indication of legislative interest in restricting the use of salary history information as part of the pre-employment process. A growing number of states and localities have adopted restrictions of this type. In some cases the restrictions apply to the private sector, in other cases, jurisdictions are restricting the ability of government agencies to request or utilize wage history information.