Minnesota Bans Employers from Asking About Salary History

Starting January 1, 2024, Minnesota will join many states and cities that have outlawed asking job applicants about their previous or current pay. The new law, known as the Preventing Pay Discrimination Act, is designed to address the persistent gender and racial pay gap that affects millions of workers across the country. 

By prohibiting employers from basing their salary offers on an applicant’s pay history, the law ensures that workers are paid fairly and equitably based on their skills, qualifications, and market value. 

In this article, we will explore the rationale and the benefits of the new law, as well as some tips for employers and job seekers to prepare for the change.

About, HF403, The Preventing Pay Discrimination Act

The Preventing Pay Discrimination Act is a new law that will take effect in Minnesota on January 1, 2024. It aims to close the gender and racial pay gap by banning employers from asking job applicants about their past or current pay. 

This way, employers cannot use an applicant’s pay history to set their salary offer, which could cause pay discrimination. Instead, employers must base their salary offers on the skills, qualifications, and market value of the applicants. 

The law also protects applicants whose salary history is publicly available unless employers deliberately seek this information to influence their salary decisions. Nevertheless, applicants can still share their pay history voluntarily, but they are not required to do so. 

Even if applicants reveal their salary history, employers can only use this information to offer a higher salary than their initial offer, but not a lower one. 

It’s worth mentioning that this new law covers all employers in Minnesota, no matter how big or small, including employees and applicants, irrespective of gender, race, or other protected characteristics.

Benefits of the Preventing Pay Discrimination Act

The law will benefit workers and employers alike, as it will reduce the risk of lawsuits, increase employee satisfaction and retention, and promote fair and equitable pay practices.

However, the primary benefit of the Preventing Pay Discrimination Act is closing the gender and racial pay gap that affects millions of workers across the country. According to the Status of Women and Girls in Minnesota, the gender wage gap has stagnated over the past five years. 

Women earn less than their male counterparts despite having the same qualifications and seniority level. This problem is even more prevalent for indigenous people and people of color. 

By banning pay history inquiries, employers can break the cycle of pay discrimination that often impacts minority groups throughout their careers. Ultimately, the Preventing Pay Discrimination Act can contribute to fairer pay scales and reduce wage disparity for underrepresented groups.

Rationale Behind the New HF403 Bill

The House passed a bill on Thursday that would ban Minnesota employers from asking job applicants about their previous or current pay. The bill, HF403, is sponsored by Rep. Kaohly Vang Her (DFL-St. Paul) and Sen. Bobby Joe Champion (DFL-Mpls) and aims to close the gender and racial pay gap in the state. 

According to Her, pay history questions cause pay discrimination, as women and people of color receive less pay than men and white people for the same work. She said a white woman earns 80 cents for every dollar a man earns, while a Latina earns 53 cents. 

Her further explains that 18 states have already outlawed the pay history question and have seen an increase in salaries for women and Black workers. She points out that the bill would require employers to pay workers based on their skills, qualifications, and market value, not their pay history. 

It’s worth mentioning that Rep. Peggy Scott (R-Andover) tried to amend the bill to remove the provision that makes it unfair to use pay history to determine wages. 

She said this would force employers to prove that they did not use pay history, which is impossible. However, Her rejected the amendment, saying it would weaken the bill’s enforcement.

Opinions on The New HF403 Bill

While the new bill will prevent employers from asking job applicants about their past or current pay, HF403 received mixed reactions from stakeholders.  For example, Supporters of the bill argue that the legislation would help close the gender and racial pay gap in Minnesota.

They cite data from the Department of Human Rights and the Status of Women and Girls in Minnesota showing persistent wage disparities among different groups of workers. These supporters also point to the positive effects of similar legislation in 18 other states, where salaries for women and Black workers have increased.

On the other hand, opponents of the bill, such as Rep. Peggy Scott (R-Andover), contend that the legislation. They argue that it puts employers in a difficult position to prove that they did not use pay history to determine future wages, which could lead to lawsuits and reputational damage.

They also question the bill’s effectiveness in addressing the root causes of the pay gap, such as education, experience, and occupation choices. Scott argued that the bill would interfere with the freedom of contract and the market forces determining wages.

Other neutral groups, such as the Minnesota Chamber of Commerce and the Minnesota Business Partnership, have expressed concerns about the bill. One example is the potential impact on the hiring process, the compliance costs, and the legal risks. 

They have requested more clarity and flexibility in the bill, such as allowing employers to ask about pay expectations, pay ranges, or pay bands. The group also asked for more data and evidence to support the need and the effectiveness of the bill.

Conclusion

Ultimately, the new HF403 bill aims to give employees better working conditions and value for their skills. This goal is possible by preventing employers from determining their pay from previous employment; however, the idea received mixed reactions.

Supporters of the bill argue that it would help close the gender and racial pay gap in Minnesota by preventing pay discrimination based on pay history. Opponents of the bill contend that it would put employers in a difficult position, which could lead to lawsuits and reputational damage. 

Nevertheless, Minnesota will implement the law on January 1, 2024, and the results could revolutionize the labor scene.