Vermont Employment Law Alert: Changes to Inquiries Regarding Salary History

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By Alexandra Clauss and Christopher Bond

Vermont employers take note: New legislation (H.294) signed into law by Governor Scott on May 11, 2018, will prohibit employers from making inquiries into a job applicant’s salary history.   

Beginning on July 1, 2018, Vermont employers must not:

  1. Ask a prospective employee or their past/current employer about that individual’s current or past compensation;
  2. Require a prospective employee’s current or past compensation meet any minimum or maximum criteria; or
  3. Decide whether to interview prospective employees based on their past/current compensation.

The ban on inquiries about current/past compensation extends to information about an applicant’s wages, salary, bonuses, benefits, fringe benefits and equity-based compensation.

Under the law, employers are permitted to ask a prospective employee about their salary expectations or requirements. Employers are also permitted to provide an applicant with information about the compensation and benefits for the position(s) being applied for.   Prospective employees may voluntarily disclose their current or past compensation.  If an applicant does volunteer such information, an employer may request information to confirm the amount requested after making an offer of employment.

Given the relatively short time horizon between the signing and the implementation of this new hiring law, employers need to act quickly to ensure proper compliance with the new requirements.    Employers should take the following steps for compliance:

  • Review their employment applications and remove any questions about current/past compensation; 
  • Train all personnel conducting interviews on the new law and instruct such employees not to request any salary history information from interviewees; 
  • Ensure that any background checks conducted on prospective employees do not include any salary history inquiries of past/current employers.  This includes making sure that any third party vendor conducting background checks on the employer’s behalf will not make such inquiries and will conduct such background checks in full compliance with the new law.

While the new law is silent on what obligations current/past employers in regard to disclosing salary information when contacted for a reference, we believe it is a best practice for employers to cease disclosing this information even if it is requested, unless otherwise required by law.  We suggest policies on providing references be revised accordingly. 

In enacting a salary history inquiry prohibition, Vermont joins a growing number of states and municipalities that have either adopted or are in the process of adopting such bans.  Proponents of the legislation believe that barring consideration of prior pay in making hiring decisions will help narrow the gender pay gap, particularly as it relates to the perpetuation of pay disparities that already exist from early in an employee’s career. 

H.294 will become 21 V.S.A. § 495m.

If you have questions about this or any other employment law matter, please don’t hesitate to contact attorneys Alexandra Clauss or Christopher Bond.