Employer Branding Talent Acquisition

The Current State of the Salary History Question

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For years, job interviews have led up to the coy guessing game known as the salary negotiation. Applicants try not low-ball, while employers dread paying more for talent than they need to.

One way around all this high-stakes guessing has been to become increasingly inquisitive about salary history, with some employers going as far as asking candidates to provide W2s to back up reported income.

It’s nerve-wracking and intrusive, and soon it may be illegal. In fact, in five states it already is. A growing number of states and municipalities are enacting laws that prohibit government agencies as well as employers from asking about salary history during the hiring process.

Gaining Momentum

California, Delaware, Massachusetts, Oregon and Puerto Rico prohibit employers from asking about certain types of compensation. New Jersey and New York prohibit state agencies from asking about past salary. In addition, a salary history ban passed by lawmakers in Illinois is expected to go into effect once legislators override the governor’s veto.

San Francisco, New York City, Albany County, and Philadelphia have also attempted to impose a ban on salary history questions. In New Orleans and Pittsburgh, city agencies cannot ask about past compensation. Even some corporations, including Amazon and Bank of America, have banned the salary question.

Despite some resistance, including Michigan’s move to ban municipalities from passing laws prohibiting salary inquiries, more states are expected to pass similar legislation soon.  

Narrowing the Gap

Salary history laws are intended to narrow the pay gap between men and women, currently hovering at about 80 cents on the dollar. Employer bias likely plays a role in the gender wage gap, but candidate behavior adds to the gap as well. Proponents hope that limits on salary history will address both problems.

Traditionally, women have been less aggressive than men when it comes to negotiating starting salaries. In addition, some employers routinely offer female candidates less, knowing they are less likely to counter offer. This means that many women are carrying the baggage of their lower entry-level salary ranges from job to job, never catching up with their male peers.

A similar pattern is at play when it comes to race and ethnicity, which helps to explain why black and Latina women faring even worse than their white counterparts, earning 60 cents and 55 cents to the dollar earned by men.

Questioning the question ban

Not all experts see the laws as a quick fix. None of the laws would prohibit employers from offering female candidates less than men based on the assumption that they will accept it. Even when no past salary history is disclosed and candidates are simply asked to name the desired salary, research shows that women typically name a lower figure.

In addition, research has shown that women who do not disclose past salary voluntarily are routinely offered slightly less than women who do disclose. In contrast, men who refuse to disclose past salaries are offered slightly more money.

Getting around the question

Instead of asking about past or current salary, some recruiters and hiring managers are asking candidates about their salary expectations. The problem with this approach is that women tend to name lower opening figures than men when asked about salary expectations.

For recruiters and hiring managers, staying on top of internal and industry salary and compensation trends is the best way to make sure your salary offers are sufficient and on target for the market, as well as equitable.

For job applicants, no matter your gender or what laws govern past salary disclosure in your area, always counter your first salary offer with a number that you are ready to back up with evidence that addresses why you are worth more, along with knowledge of industry norms.

Staying in compliance

If you live in a state or municipality where salary history questions are banned or are likely to be forbidden soon, review all recruitment forms and processes, such as online applications and job ad templates, and remove all mentions of past salary. Instead, set a pay range for each job and consider sharing it with applicants early on, or even include it in the job description portion of the job ad.

Make sure you inform all managers and personnel who are involved in the hiring process about the policy to avoid asking questions about past salary and make clear to them what the stakes are if prohibited questions are asked during interviews.

If you are a recruiter in a jurisdiction where a ban applies, make sure your clients understand the law. If you are an employer working with an outside recruiter, make a point of mentioning the ban on seeking past salary information from candidates. According to Delaware’s law, for example, an employer could be fined thousands of dollars per offense if an outside recruiter requests salary history on the employer’s behalf.

Embracing change

It may take some extra planning and discipline to set and stick to stated salary ranges for all job functions, but in the long run, it may lead to stronger hires. After all, it makes more sense to pay someone according to their skills and potential value to the company rather than rewarding them based on the negotiation weaknesses of their last employer.

About the author: MightyRecruiter is an intuitive, comprehensive, and transformative recruiting solution. Source passive candidates, track and manage applicants, access an expansive resume database, take advantage of Mighty’s free job postings, and hire the most relevant candidates for your jobs, all at no cost.

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