Mailbag: Do salary history bans apply across state lines?

In HR Dive’s Mailbag series, we answer HR professionals’ questions about all things work. Have a question? Send it to [email protected]

Q: When it comes to pay history question bans, which state has jurisdiction? Is it the state where the employee lives, the state in which the employee will work or the state in which the company’s headquarters resides?

A: It is a question employers have been confronting for years now, and one for which the answer is in some ways the same — and in some ways slightly altered thanks to the last year-and-a-half.

“In the past, the answer has just been where the employment is going to happen,” said Susan Gross Sholinsky, member of the firm at Epstein Becker Green. For example, if a New York City-based employer were hiring someone to work there, the city’s ban on pay history inquiries would apply, even if the employee lived in neighboring New Jersey. And if the employee’s job would be based in New Jersey, so long as the interview took place in New York, an employer arguably still may want to consider complying with the city’s ban.

Remote work, hybrid work and other pandemic-driven work models have added new wrinkles. At the beginning of the pandemic, most employees were considered to be performing services in the locations at which they would be working had they not been subject to work-from-home orders, said Leni Battaglia, partner at Morgan Lewis, though he noted there were some exceptions in different jurisdictions.

So for much of 2020, the New Jersey-New York example would have been impacted by the two states’ various jurisdictional regulatory decisions. For instance, New Jersey temporarily suspended its Corporation Business Tax nexus standard for employees who normally would have worked out of state but, due to the pandemic, were forced to work from home in New Jersey.

Now, New York City employers could conceivably be hiring fully remote workers in New Jersey and other states in droves. And in the past, Sholinsky said that a legal argument could have been made that the state or city permitting the work would see its laws on salary history question bans, among other employment items, apply.

“If an employer had an office in New York but hired someone to work from home in New Jersey, I would say you would probably want to comply with both laws,” Sholinsky said. That may be a conservative approach to the subject, she noted, but it could help employers cover their bases. Battaglia agreed, calling this the safest approach, though he added that different employers may take different approaches to risk.

A similar approach could be taken for jobs in which a candidate would work a hybrid schedule, including one that involves crossing state lines, Sholinsky said. In situations where the role is mostly remote with the exception of the occasional need to report to the office for training or something similar, employers may need to ensure the time spent away from the office does not tip the scale in favor of more than one jurisdiction, Battaglia said.

But in many cases, employers will still need to conduct a statute-by-statute analysis of a given job interview or hiring process, Battaglia added. “People need to consider whether they’re going to be subject to laws where their employers are located, where the work is performed or some mixture of both.”

Sholinsky noted that if a person applying to work remotely in another state, like New Jersey, were to travel to New York for an interview at the company’s office in New York, the employer might consider applying both states’ laws in such a situation as well.

But does the same advice hold true if the employer is based in a jurisdiction that has a pay history question ban and holds a virtual job interview with a candidate based in a jurisdiction that does not have such a ban? Sholinsky said it may be arguable that the latter state’s law applies in that scenario, though employers might choose to apply both state’s laws regardless.

Moreover, Sholinsky noted that employers operating in both types of jurisdictions — those with bans and those without — often opt to adopt a uniform policy that applies to all of their offices nationwide. Some large employers already take that approach.

But those looking for a blanket legal answer are not likely to find it. “There is no uniform answer, unfortunately, and it is going to depend on the statute or ordinance in that jurisdiction, any administrative guidance about how it’s going to be applied and the case law,” Battaglia said.

For a list of state and local governments that have banned salary history questions, see HR Dive’s salary history ban tracker.

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