Pay equity continues to be one of the most significant workforce issues facing employers today. Pay equity laws aim to increase transparency into employers’ pay practices – with the ultimate goal of ensuring that employees are paid fairly regardless of demographic factors including race and gender. However, they may also require employers to release sensitive, propriety information about internal pay practices – which arguably constitute trade secrets – potentially compromising employers’ ability to remain competitive in hiring and retaining top talent. See, e.g., In re High-Tech Employee Antitrust Litig., No. 11-cv-02509, 2013 WL 163779, at *2, 5 (N.D. Cal. Jan. 15, 2013) (explaining that trade secrets include “sources of business information that might harm a litigant’s competitive standing,” including “confidential information regarding . . . recruitment strategies, policies, and procedures, [and] quantitative data concerning those topics”).
Thirteen states, and many more counties and cities, have incorporated a “salary history ban” provision into pay equity legislation applying to private employers. Salary history bans generally prohibit an employer from inquiring about a job applicant’s pay history to prevent past discriminatory pay practices from coloring future salary decisions. Each law has its own intricacies, but several include a requirement that an employer provide a position’s “pay scale” to an applicant for that position. For example, Cincinnati’s law, which will go into effect in March 2020, requires that “an employer, upon reasonable request, [] provide the pay scale for a position to an applicant applying for employment, for which the applicant has been provided a conditional offer of employment by the employer.” Similarly, Washington State’s law, which was effective as of July 28, 2019, requires employers to “provide the minimum wage or salary for the position” upon request after an initial offer of employment, but also clarifies that if no wage scale or salary history range exists for a position, the employer must provide the minimum wage or salary expectation prior to posting that position. California’s law – as one of the first of its kind which went into effect on January 1, 2018 – requires “[a]n employer, upon reasonable request, [to] provide the pay scale for a position to an applicant applying for employment.” California then passed AB 2282, which clarified that (1) an “applicant” is someone looking to work at the company who doesn’t already work there; (2) a “reasonable request” is one made after the application and initial interview have been completed; and (3) a “pay scale” is a salary range, or an hourly wage rate.
Many employers remain concerned about releasing sensitive information to insincere applicants or to every internally transferred employee or how best to protect proprietary compensation data from competitors. The proliferation of these laws is a fairly recent trend, so there is little guidance as to how they will be interpreted or enforced and whether employers’ efforts to keep sensitive material confidential will be successful. Some employers have considered requiring a job applicant to sign a nondisclosure agreement before receiving pay scale information, but this raises concerns about violating the public policy behind these laws.