The days of asking a candidate “What is your current / last salary” seem to be ending. Currently in 14 states, salary history bans have been enacted. Is there really any benefit from removing salary history questions when hiring? In this Astronology®, we discuss the current legal trend of salary history bans.
Salary History and the Gender Pay Gap
In recent years there’s been much discussion on the apparent wage gap between the genders. A 2018 report from the American Association of University Women for example, reports that women in the U.S. are paid 80 cents for every dollar paid to men. How can this be? Examining salary negotiations may help. Traditionally, organizations would base salary negotiations on salary information a candidate would provide, with an eye to the organization’s compensation system. The goal in sharing this information was to give the candidate a competitive salary.
Yet, in many cases, a woman candidate leaving a job where she wasn’t being paid appropriately would finding herself anchored to this pay level due to sharing her salary history at a new job. Candidates who choose not to provide their salary histories run the risk of being considered “uncooperative.” A 2017 Payscale survey found that women who did not share their salary histories were paid 1.8 percent less than women who did. Even more surprising, men who did not share their previous salaries were paid 1.2 percent more.
These alarming details have pushed many states and cities to ban salary history questioning when hiring new employees. This may even become a nationwide law. Currently, Congress is considering the Paycheck Fairness Act. It would prevent employers across the nation from asking applicants about their salary histories, and require proof that any pay disparities are job-related and not based on gender.
What Can You Do?
We have much help in how to navigate the hiring process without asking for salary history. Some helpful tips include the following:
- Be Aware of the Laws – The Paycheck Fairness Act has not passed yet, but as mentioned above many states such as California, Connecticut, Massachusetts and New York have already enacted laws prohibiting employers from asking salary history. Be aware of what laws apply to your organization.
- Adjust Your Thoughts on Compensation and Negotiation – A 2018 SHRM article quoted Beth Conway, VP of HR at CA Technologies North American on why this may be a challenge: “This may be particularly tough, since many hiring managers rely on the ‘false sense of security’ that comes with offering a candidate a modest salary hike.” By shifting your thoughts to making sure employees are paid their worth instead of what their previous employer paid, asking salary history won’t be necessary.
- Train Hiring and Management Teams – Now that you’ve adjusted your thoughts and are aware of the law, it’s also important to train your employees involved in the hiring process. Document the training process to ensure accountability.
- Focus on Skill and Use Salary Ranges – By focusing on the required skill for the role and looking for the best skill set in a candidate, you ensure you’re adding a valuable member to your organization. When it comes to discussing wages, by having salary ranges already in place you give the candidate a general idea of what he / she can expect.
“In today’s climate of increased emphasis on pay discrimination and pay equity, employers must have current pay ranges in place,” explains Jennifer Loftus, National Director for Astron Solutions. “More and more clients are reaching out to develop or update their pay ranges, conduct pay equity audits, and make changes if needed based on the findings. That’s a trend we’re thrilled to see.” When considering a pay equity audit, estimate four to eight weeks for the process. Also consider at the start if internal or external legal counsel needs to be involved.
If your organization doesn’t want to “go it alone,” Astron Solutions can provide analysis and expert consultation in developing pay ranges and conducting pay equity audits for both for-profit and not-for-profit organizations. Contact us today to get started!
Is your organization affected by any recent salary history legislation? Share in our comments section below what proactive steps your organization takes to stay in compliance.