New Minnesota Law Makes Pay History Inquiries Illegal
For decades now, policymakers and commentators have identified gaps in pay between people of different genders and races as a problem that needs solving. Starting on January 1, 2024, Minnesota will have a new legal tool for doing just that. Under a new law that goes into effect on that date, employers in Minnesota will be prohibited from inquiring about a prospective employee’s pay history. If they do so, they can be sued for discrimination.
The theory behind this law is that because women and other historically marginalized groups have been paid less than their comparators for generations now, using pay history as a justification for setting future pay will serve to perpetuate those disparities. In order to break that cycle and place all prospective employees on a level playing field, the law makes it illegal for employers to ask employee what compensation they received in previous jobs.
Once the law is in effect, an employer that asks a prospective or current employee what they got paid at a previous job will have violated the Minnesota Human Rights Act (MHRA). The law does not require that a suing employee prove that the inquiry was otherwise discriminatory. Rather, the law presumes that inquiries into pay history are discriminatory and makes them illegal without any need to show a discriminatory motive. In fact, nothing in the new law requires that an employee bringing a claim even be a member of a protected group. Pay history inquiries will simply be considered per se violations of the MHRA.
Notably, the law does allow employees to voluntarily disclose their pay history in order to improve their bargaining position when negotiating compensation with an employer. If an employee chooses to do so, the employer is allowed to consider the information, but can only use it to justify increasing the proposed compensation. In other words, if an employee voluntarily discloses her previous compensation, the employer cannot use that information to justify offering a lower wage than it planned to offer for the position.
Violations of this new law will be subject to the same claims for damages as other violations of the MHRA. That means an employee with a claim under this new law can seek damages for back pay, front pay, and emotional distress, as well as treble an punitive damages. The Minnesota Department of Human Rights has enforcement power for the new law, but as with other MHRA claims, aggrieved employees can sue in state or federal court to recover damages.
The Minneapolis Office of MacDonald Hoague & Bayless helps clients who face any form of discrimination in the workplace. If you have been discriminated against by your employer, including through pay history inquiries, please contact us at 612.349.2720 to discuss your legal options.