Employer Alert: Preventing Pay Discrimination Act Goes Into Effect January 1, 2024
Effective January 1, 2024, Minnesota’s new Preventing Pay Discrimination Act prohibits employers, employment agencies, and labor organizations from inquiring into, considering, or requiring disclosure of an applicant’s pay history for the purposes of determining wages, benefits, salary, or other compensation.
The Act does not prohibit an employer from providing information about the wages, benefits, or salary offered in relation to a specific position, or from discussing with an applicant their expectations or requests with respect to compensation. Moreover, applicants may voluntarily, and without asking, disclose their pay history for the purposes of negotiating wages, benefits, salary or other compensation. If an applicant does voluntarily provide their pay history to an employer for this purpose, the employer is allowed to consider the voluntarily disclosed pay history information to support a wage higher than was initially offered.
This new law was adopted to encourage employers to rely on an applicant’s skills, education, certifications, licenses, and other qualifications, with the purpose of narrowing the gender and racial pay gap. Specifically, using past pay to determine future pay contributes to and reinforces Minnesota’s pay disparities; when someone’s future pay is locked to their past, the cycle of unequal pay impacts them throughout their career.
The Act is enforced by the Minnesota Department of Human Rights and goes into effect January 1, 2024. It applies to all public, private, and nonprofit employers in Minnesota. With respect to covered individuals, the law applies to all job applicants, including current employees seeking an internal promotion or transfer, as well as full- and part-time employees.
In preparation, employers should—
- Determine what information will be used to decide an applicant’s compensation, excluding the use of pay history. For example, this may include consideration of the current job market and the applicant’s skills, education, and other qualifications;
- Communicate the new law to employees who are in charge of hiring—specifically, management, supervisors, and human resources;
- Review employment applications and interview questions to make sure they do not ask for an applicant’s current or past pay history;
- Consider using a compensation form for candidates to demonstrate consistent considerations when making decision’s about an applicant or employee’s compensation.
In addition to the Prevent Pay Discrimination Act, there are other new state laws that go into effect January 1, 2024. Parker Daniels Kibort has one of the top labor and employment practices in the State of Minnesota. To ensure your business follows all applicable laws, contact our labor and employment team at 612.355.4100.
