Legal Blocks to Salary History Inquiries

It’s a question we have all likely asked or been asked at least once in our careers – What is your current salary? At the very least, you have probably seen that “Salary History” section included on a job application or two along the way.

But those kinds of inquiries about salary history might become a thing of the past, if the current trend of banning such questions continues.

In some way, shape or form, inquiring about a job candidate’s existing or prior earning power has long been accepted as a legitimate HR practice, and with good reason. Asking a candidate for his or her wage history has been an appealing approach to negotiate the best salary for employers because it allows them to offer sufficient compensation to entice them… without overpaying.

While on paper, this sounds like a reasonable approach, it is believed to have contributed to pay inequities in the workplace. An American Association of University Women study found that women who work full-time earn about 80 percent of what their male counterparts earn. The gap is wide, persisting across all racial and ethnic groups, and deep, having been perpetuated for decades.

In addition, throughout history women and minorities have had less opportunity to work in jobs where higher wages are available. Even when they are placed in higher-paying roles, they often get offered less money than white males.

In an article I co-wrote with Caroline Gibson, senior consultant for EASI•Consult®, about the inequities of pay and promotion in the IT industry for our November 2017 newsletter, we offered several solutions to this problem. One was to avoid linking new hire compensation to pay histories from other companies. Candidates’ salary histories are irrelevant, since you pay them for the work they will perform in your company.

Pay should be based on the demands of the job. An employee should be compensated for the skills and abilities required to complete the required tasks and overall demands of the job being filled. Consideration can and should also be given to the candidate’s ability to reach the next level in a job progression, so long as it is reasonable that he or she may make that move within two years of hire (federal “Uniform Guidelines on Employee Selection Procedures,” 1978).

Since 2016, 10 states, cities and localities have passed legislation that bans salary history inquiries. Massachusetts was the first, passing a law preventing employers from asking job candidates about salary during the interview process. State lawmakers there went beyond the hiring process, also making it illegal for an employer to require employees to refrain from discussing or disclosing their wages, benefits or other compensation at work. The intention of the law is to help reduce that wage gap between men and women and minorities.

Delaware, Oregon, Illinois and California have since followed suit, as have Albany, Philadelphia, New York City, San Francisco and Puerto Rico. Another 20 states have proposed similar legislation. Like Massachusetts, the impetus behind the laws was the wage gap between men and women and, in some cases, between minorities, wading into territory normally covered by civil rights anti-discrimination acts.

A few examples of prohibited practices include:

  • Delaware – The law prohibits salary-based screening of job applicants before making employment offers but does allow employers to set a salary range and negotiate compensation.
  • Oregon –The Oregon Equal Pay Act expands coverage of women to discrimination based on race, color, religion, sexual orientation, national origin, marital status, disability, age and veteran status.
  • New York City – The law prohibits employers from asking about or verifying a job applicant’s salary history but does allow employers to discuss the proposed or anticipated salary for a position, as well as the candidate’s salary expectations.
  • California – Under the California law, an employer could be held liable if they ask about salary history when interviewing, extending an offer or deciding how much to pay applicants. Also, employers are required to give applicants the pay scale for a position upon request.

While the U.S. may be a long way from a universal ban on pay history inquiries, organizations should still begin considering – or reconsidering – their policies of using this information.

Employers who have offices in multiple states may want to make company-wide changes regarding salary history inquiries during the hiring process. Employers should consult with legal counsel to review and revise documents, employment application and background check forms. In addition, hiring managers and interviewers will need to be trained to avoid questions prompting disclosure of salary at a previous position.

Pay inequity is unfair at all levels and has a way of undermining the positive culture of an organization. HR professionals can get ahead of this problem by acting now on this outdated practice.

David Smith, PhD, is the president and CEO of EASI•Consult®. EASI•Consult works with Fortune 500 companies, government   agencies, and mid-sized corporations to provide customized Talent Management solutions. EASI•Consult’s specialties include leadership assessment, online pre-employment testing, survey research, competency modeling, leadership development, executive coaching, 360-degree feedback, online structured interviews, and EEO hiring compliance. The company is a leader in the field of providing accurate information about people through professional assessment. To learn more about EASI•Consult, visit www.easiconsult.com, email ContactUs@easiconsult.com or call 800.922.EASI.

EASI·Consult® is the registered name for Expert Advocates in Selection International, LLC.
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