by Effective this year, Minnesota has banned employers from making salary inquiries of job candidates. The law applies to both external and internal candidates. It goes beyond constraints on asking the candidate about pay history to include a ban on consideration of pay history obtained from other sources. Employers may be surprised at how the enforcing agency’s interpretation of the law limits the review and consideration of the employer’s own information in the hiring of current employees into new positions.
The prohibition on obtaining and using candidate pay history is an amendment to the Minnesota Human Rights Act and is enforced by the Minnesota Department of Human Rights. The agency’s website explains how the law would apply to eight common scenarios faced by Minnesota employers. https://mn.gov/mdhr/employers/pay-history/.
All eight scenarios are instructive and could help train recruiters and hiring managers about the law’s application. All scenarios emphasize that the employer should base a compensation offer on the position’s salary range, the applicant’s skills, unique knowledge, abilities, relevant educational background, and market conditions.
Staff familiar with other salary inquiry bans, such as the one placed on federal contractors, will recognize some differences in the Minnesota law’s constraints. For example, like bans in other states, the Minnesota law allows consideration of pay information when it is provided, unsolicited, by the candidate. Unlike similar laws, however, Minnesota law only enables prospective employers to consider the information in order to offer higher compensation than it initially offered.
Employers may be surprised by the interpretation of two internal candidate scenarios.
Scenario 4: The hiring manager wants to ask the human resources team for an internal applicant’s compensation information so the hiring manager can offer higher compensation to the employee as encouragement to accept the position. The state agency says that providing the information would be violating the law:
“Under the Minnesota Human Rights Act, an employer cannot inquire into, consider, or require disclosure from any source the pay history of an applicant for employment for the purposes for determining wages, salary, earnings, benefits, or other compensation for that applicant.“
The agency notes that the hiring manager may have good intentions to use the information to give the employee a raise. The agency points out that the law applies regardless of intentions. It cautions that the employee may have been paid unequally in the past and that tying future pay to their past pay only continues that cycle of unequal pay.
Scenario 6: In this example, the hiring manager already knows the internal applicant’s compensation information because the employee already works in the manager’s division. The state agency asks: Can the Hiring Manager consider the internal applicant’s known hourly wage when making an offer? The agency answers the question by stating that to do so would be a violation of the law:
“Under the Minnesota Human Rights Act, an employer cannot consider the pay history of an applicant for employment to determine wages, salary, earnings, benefits, or other compensation for that applicant.”
Note how this scenario has a different outcome than when the hiring manager knows the information because the employee has voluntarily provided it. If the hiring manager gets the information from the employee, the manager can consider it as a factor in offering higher pay than originally offered.
The described application of the law raises some practical questions when considering internal candidates. An employee will likely assume that the hiring manager knows their pay history. Should the manager tell the employee they don’t know the information? Would that be interpreted as a prohibited solicitation of pay information? In defending against a claim that the salary inquiry ban law was violated, employers may have challenges in proving that no consideration was given to unsolicited but known facts.
Even if an employer’s recruiters and hiring managers are familiar with other state and federal salary inquiry bans, Minnesota employers may find it prudent to alert their hiring teams to the details of the state law. In addition to the eight scenarios interpreting the law, the Minnesota Department of Human Rights provides an outreach kit to help employers and advocacy organizations educate stakeholders on the law: https://mn.gov/mdhr/employers/pay-history/outreach.jsp. The kit includes flyers, social media messages, and a newsletter article to use as communication tools.
