The Impact of Ban-the-Box and Salary History Prohibitions on Employers

Class action lawsuits involving the federal Fair Credit Reporting Act (FCRA) are not the only compliance concern for employers performing background checks in an increasingly complex legal environment. In addition, employers are impacted by state and local requirements, including “ban the box” laws and salary history prohibitions. This article is a brief introduction to these two subjects.

Ban the Box

“Ban the box” laws delay questions about the criminal history of applicants until later in the hiring process by removing the box applicants are asked to check if they have a past criminal record. The laws are designed to give ex-offenders a chance to show their knowledge, skills, abilities, and experience for a job and not be knocked out of consideration in the first place due to a criminal record.

As of March 2019, more than 150 cities and counties and 33 states have ban the box laws. Some ban the box laws have morphed into fair chance hiring laws that also impact how employers use criminal records, if discovered, and empathize with the need for an “Individualized Assessment.” Many private employers have also pledged to “ban the box.”

Studies show that not only do ex-offenders make good workers and have less turnover, but employment also is a critical tool to reduce recidivism. In a tight labor market, ex-offenders may represent an untapped labor pool for some employers.

However, having mixed local and state ban the box laws without giving employers protections from negligent hiring lawsuits can hurt ex-offenders instead of help. Studies show that without background screening, some employers may assume job applicants have a criminal record, or they may rely more on continuous past employment, which is even worse for ex-offenders looking for work.

The U.S. Equal Employment Opportunity Commission (EEOC)—the government agency enforcing federal laws prohibiting employment discrimination—recommended that employers “ban the box” in its 2012 “Enforcement Guidance on the Consideration of Arrest and Conviction Records in Employment.”

Salary History

Prohibitions that prevent employers from asking applicants about their salary history have increased in the United States as the pay equity movement to narrow the gender wage gap between women and men grows. As a result, states, counties, and cities have passed restrictions on salary history questions.

The idea behind these bans is that if new pay is based on previous pay, then gender pay gaps are perpetuated. The goal of salary history bans is to base compensation on the work performed and not on reliance on previous pay that may reflect gender discrimination. Employers need to ensure that past salary is not discussed in interviews and that background checks do not seek salary information.

Statistics from the U.S. Census Bureau show that women earned 80% of what men earned in 2015. The gender wage gap between men and women has narrowed by less than one-half a penny per year in the United States since 1963, when Congress passed the Equal Pay Act (EPA), the first law aimed at prohibiting gender-based pay discrimination, according to the National Committee on Pay Equity.

Lester Rosen, Attorney and Founder and CEO of Employment Screening Resources (ESR).