On June 26, 2019, the City of Toledo, Ohio passed the “Pay Equity Act to Prohibit the Inquiry and Use of Salary History in Hiring Practices in the City of Toledo” (Ordinance 173-19), which prohibits employers from inquiring about the past salary history of job applicants during the hiring process to ensure pay equity. In doing so, Toledo became the second city in Ohio, following Cincinnati, to prohibit certain uses of historical pay information during the hiring process. On March 13, 2019, the City of Cincinnati passed Ordinance 83-2019, adding Chapter 804, “Prohibited Salary History Inquiry and Use,” to its Municipal Code.
Both laws are aimed at eliminating the gender wage gap. The City of Toledo’s Ordinance 173-19 specifically recognized:
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Women in the United States are paid 80 cents for every dollar paid to men, losing out on a combined total of more than $840 billion annually. Among women who hold full-time, year round jobs in the United States, African American women are typically paid 63 cents, Hispanic women are paid 54 cents, and Asian women are paid 85 cents for every dollar paid to white, non-Hispanic men. Studies show that basing a worker’s salary offer on a wage from a previous job can perpetuate the current wage inequity.
Once effective, in March 2020 (estimated) and June 25, 2020 respectively, Cincinnati Municipal Code Chapter 804 and Toledo’s Pay Equity Act will make it unlawful for any employer of 15 or more employees within the municipality to:
- Inquire about the salary history of an applicant for employment; or
- Screen job applicants based on their current or prior wages, benefits, other compensation, or salary histories, including requiring that an applicant's prior wages, benefits, other compensation or salary history satisfy minimum or maximum criteria; or
- Rely on the salary history of an applicant in deciding whether to offer employment to an applicant, or in determining the salary, benefits, or other compensation for such applicant during the hiring process, including the negotiation of an employment contract; or
- Refuse to hire or otherwise disfavor, injure, or retaliate against an applicant for not disclosing his or her salary history to an employer.
“Salary history” is defined as an applicant’s “current or prior wage, benefits, or other compensation” without regard to objective productivity, revenue, sales, or other objective compensation measures. Both ordinances also provide that employers (1) may engage in discussions with an applicant about the applicant’s expectations related to salary, benefits and other compensation and (2) must, upon reasonable request, provide the pay scale for a position to which an applicant has received a conditional offer of employment.
Neither restriction will apply to voluntary and unprompted disclosures related to an applicant’s pay history. Additionally, both ordinances exclude from coverage:
- Positions for which compensation is determined pursuant to collective bargaining;
- Salary discussions involving an applicant rehired by an employer within five years of their most recent date of separation
- An employer considering applicants for internal transfers or promotions; or
- Any attempt by an employer to verify an applicant’s disclosure of non-salary related information or conduct a background check, provided that any disclosure of salary history is not relied on when determining the salary of the applicant.
Both laws provide for a private cause of action, which can be filed by an applicant within two years of any violation. Remedies for violation of these laws include compensatory damages, reasonable attorney’s fees and costs, and equitable relief as a court deems proper.
By enacting these laws, the City of Cincinnati and the City of Toledo join numerous states and other municipalities that are also combating the gender wage gap by restricting the way in which salary history can be used in hiring. Currently, states that have laws restricting a private employer’s usage of compensation information include Alabama, California, Colorado, Connecticut, Delaware, Hawaii, Maine, Massachusetts, New York, Oregon, Vermont, Washington, and Puerto Rico. Municipalities independently enacting
restrictions on a private employer’s usage of salary history information include Albany County, NY, City of Cincinnati, City of San Francisco, City of Toledo, New York City, Philadelphia, Suffolk County, NY, Westchester County, NY. Various other states and municipalities ban the use of salary history by state and local governments and public entities. In contrast, certain states, such as Michigan and Wisconsin, have passed laws preventing local governments from restricting employers in their use of salary history information.
Operating a business in multiple cities or states can present employers with confusing and often conflicting legal requirements. In this rapidly-changing legal environment, we recommend consulting legal counsel prior to engaging in hiring in any new location as well as conducting regular audits of the jurisdictional requirements where employers currently
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