Many state and local governments are enacting laws that ban employers from asking questions of candidates related to salary or wage history. The practice of an employer using a candidate’s salary or wage history during the hiring process may have major repercussions in perpetuating the pay gap many women and minorities face in their careers. Employers who rely on salary or wage history to set future salaries or wages assumes that prior salaries or wages were fairly established in the first place. Using salaries or wage history, which may have been tainted by bias, means that discriminatory pay follows workers wherever they go, whatever their job, no matter their skill set. Thus, many state and local governments believe that curtailing this practice will go a long way in the fight for pay equity.
The purpose for banning salary and wage history inquiries of candidate’s is to eradicate the gender gap between men’s pay and women’s and minorities pay. The idea is to level the playing field between candidates and to put a stop to practices that force women and minorities to carry their lower pay status from an old to new job. Pay inequality happens in part due to traditional salary negotiation practices. Men tend to negotiate higher salaries compared to women and minorities. To remedy this situation, employers need to put candidates on an equal playing field to begin with by defining the pay scale for a job based on competitive market rates and job requirements, which ultimately forces employers to make offers according to a candidate’s qualifications. Instead of asking candidates for their salary or wage history, employers should be asking what the candidate’s salary or wage expectations are with regards to the job that will be performed. By sharing the job description, the pay grade for the job, e.g. $15.00 per hour to $21.00 per hour, $55,000 to $70,000, etc. the employer is setting the expectation as to what the job pays based upon a certain skill set during the interviewing process. If a candidate then tries to negotiate a higher salary or wage, the employer should share that the higher salary or wage represents a higher-level job and what the higher-level skill set requires. This transparent approach helps to avoid candidates and ultimately employees from questioning as to whether they are paid fairly or not helps to eradicate the pay gap between men, women and minorities.
Critics of transparent pay practices state that putting candidates on an equal playing field with regards to closing the earning gap actually widens the gap. If employers are not able to ask a candidate what their salary or wage was at a previous job, that they will simply offer all new hires, whether they are men, women, or minorities, a lower wage to start. In addition, women and minorities could lose out, or fare even worse, as employer’s who don’t know a candidate’s salary or wage history will assume that they made a lower salary or wage at previous jobs, thus start them at a lower salary or wage. Equal pay for equal work, regardless of sex or race, is a fundamental concept that has been part of our nation’s laws through the Equal Pay Act of 1963, for more than half a century, but with this way of thinking, women and minorities will continue to face barriers to equal pay.
Many states have enacted some form of salary or wage history ban for employers to include, but not limited to the following:
- California – all employers in the state
- Connecticut – all employers in the state
- Delaware – all employers in the state with more than four employees
- Hawaii – all employers in the state
- Massachusetts – all employers in the state
- Michigan – all state agencies, as established through executive order
- New Jersey – all state agencies, as established through executive order
- New York – all state agencies, as established through executive order
- North Carolina – all state agencies, as established through executive order
- Oregon – all employers in the state
- Puerto Rico – all employers in the territory
- Vermont – all employers in the state
Localities who have enacted a salary and wage history ban includes:
- San Francisco – all employers in the city
- Cincinnati (starting in 2020) – all employers in the city with greater than 15 employees
- New York City – all employers in the city
- Winchester County, New York – all employers in the county
- Philadelphia (pending a legal challenge) – all employers in the city
- Pittsburgh – all city agencies
- Salt Lake City – all city agencies
- Kansas City – all city agencies
- Albany County, New York – all employers in the county
- New Orleans – all city agencies
- Louisville – all city agencies
- Chicago – all city agencies
- Atlanta – all city agencies
The above lists are not all-inclusive, so it is suggested that employers ask their employment law attorney and/or HR professional if their organization is impacted by the salary and wage history ban.
In general, depending upon the state or locale, employers who are impacted by the salary and wage history ban may not inquire or seek information regarding a candidate’s current or past compensation (compensation includes wages, salary, bonuses, benefits, fringe benefits, or equity-based compensation), require that past compensation levels meet certain criteria, or determine whether or not to interview an applicant based on past compensation. Employers may ask candidates about their salary or benefit expectations, provide candidates with information on the employer’s salary and benefits (salary and wage transparency), and verify salary or wage data after an offer of employment is made, if a candidate voluntarily provides past salary or wage information. However, again, these guidelines may differ from state to state and locale to locale, so making sure that those involved in the hiring process are aware of the ban and what is required based upon an employer’s individual location is critical. Affected employers will also need to retrain those involved in the hiring process, review applications for language that might violate the law, examine their reference checking process and ensure that they are able to document that salary and wage history has been removed from the hiring process completely.
For additional information about salary and wage history bans and how they may impact your organization, please contact us at www.NewFocusHR.com.
Written by: Kristen Deutsch, M.B.A., CCP