Compliance in the Employee Life Cycle: Before the Hire

Compliance in the Employee Life Cycle: Before the Hire

There are several pre-hire matters to consider when tracking employment legislation.

Viewed by many as one of the most essential elements of running a strong organization, the administration and management of the employee life cycle is a critical component of human capital management (HCM). This vital element also tends to be one of the most challenging, due to the regular introduction of new employment legislation that dictates how an employer should handle various pieces of the employee life cycle process.

As we move into the second half of 2018, we have already seen a year full of new compliance trends in regard to this kind of legislation. With these new trends, employers are having to learn how to react quickly, at times with little to no guidance on how to incorporate the new legal requirements. In addition to the new trends, there are tried and true obligations that have persisted over the last several years that employers also need to incorporate into their policies and procedures.

This three-part series will review key legislation trends to watch in the areas of pre-employment, pay and general employee policies.

Let's start with compliance before the employee is hired.

Ban the Box

A topic that has been trending over the last several years is "Ban the Box," or the practice of removing the criminal history question from an application. With two states recently enacting legislation, we are now up to 31 states, the District of Columbia and over 150 cities and counties that have adopted a Ban the Box or "fair chance" policy. Eleven states and 17 cities and counties have incorporated private employers in their laws. It's important to note that, like other legislation, no two ban the box policies will be the same:

  • Some locales, such as California and New York City, have extra steps for the employers to take should they decide to not make an offer or rescind an offer based on a candidate's criminal history.
  • California, Colorado, Delaware, Hawaii, Minnesota, Nevada, New Mexico, New York, Ohio, Pennsylvania and Tennessee all require that the employer consider the relationship of the offense to the job being offered for public employers. California, Hawaii and Minnesota also have legislation inclusive for private employers.
  • Most states also have stipulations on what information can be considered.

It's imperative that, as an employer, if you choose to eliminate only the question on the application based on locations, you keep up with which states and/or jurisdictions are enacting legislation.

Salary History Ban

What could be classified as the hottest employment legislation trend in 2018, the salary history inquiry ban is turning into a topic that could be here for the long haul. Currently, 17 states and local jurisdictions have enacted legislation on this topic. Twelve more states and jurisdictions have legislation pending.

The purpose behind banning employers from inquiring into an applicant's salary history is to promote the idea of paying for a skill set against what a candidate is earning or made in prior roles. For example, a parent exits the workforce to stay at home and raise their children. Once the parent decides to go back to the workforce, 5-10 years after leaving, how relevant would their prior pay be? A lot can happen in 10 years, including cost of living and industry changes. Yet some employers were still using prior pay as a gauge for an offer.

By banning salary history inquiries, legislators hope that the pay equality gap narrows. Organizations, meanwhile, hope to have higher employee engagement as employees who are compensated for skill set and attributes will hopefully be better engaged.

The status of certain legislation is always changing, and it's wise to monitor local activity. For example, in 2017, Philadelphia was on track to become the first jurisdiction to have their salary history inquiry ban statute go into effect. A day before this was set to happen, the Chamber of Commerce sued the city and the effective date was delayed. In spring 2018, a federal judge ruled that the Philadelphia law violated the First Amendment in banning employers from asking about salary history, but also held that companies cannot base hiring decisions on salary history. Both parties have since appealed, and the case is making its way to the U.S. Court of Appeals for the Third Circuit for review.

With a salary history inquiry ban, there are a few items to remember:

• Some states allow for voluntary disclosure to be documented; others do not.

• In some jurisdictions or states, an employer can ask for salary history after the offer has been made.

• Most states have not defined "candidate," meaning the legislation is open to interpretation if it's inclusive of both internal and external candidates. California currently has legislation pending that would provide that definition.

• In California, should a candidate request to see the pay scale for the position they applied for, an employer must provide it.

As a current best practice, employers can ask the candidate for a desired salary if offered the position, or give the candidate a range of what the position pays to see if that is acceptable.

Use of Credit Data in Recruiting

Recently, up to 14 jurisdictions passed restrictions relating to the conditions under which a credit report may be considered during the recruitment process. Most pending legislation at the state level has stalled due to the states adjourning for this legislative session without taking action, but we can expect to see these resurface once the states begin their 2019 sessions.

Drug Testing for Marijuana Pre-Employment and During Employment — Recreational and Medicinal Use

In the early part of 2018, legislative activity around potential laws relating to the usage of medical and recreational marijuana in the workplace increased. This uptick coincides with the recession of the Cole Memo by the current administration, which tends to leave this topic up in the air at the state level since most state legislation would differ from federal legislation. This being said, it's important for employers to stay up to date on this legislation and begin reviewing the employment drug test policies that include testing for marijuana.

Recently, Maine enacted legislation that prohibits employers from taking adverse action on a candidate who tests positive for marijuana in a pre-employment drug test, even if the use of marijuana is not for medicinal purposes. Adverse action can only be taken post-hire, should an employee use marijuana on the job.

More from this series:

Compliance in the Employee Life Cycle: Compensation

Compliance in the Employee Life Cycle: Employee Policies to Watch

Additional Resources: