A number of cities, states and territories in the US have banned employers from asking about candidates’ previous salaries in recent months. Here’s what you need to know about the salary bans:
These new laws are an effort to combat wage discrimination and eliminate the gender pay gap. In the US, women still earn just 80.5 cents for every dollar a man earns. When companies anchor compensation to an employee’s salary at a previous role, the gender pay gap is exacerbated over time.
These cities, states and territories have already banned employers from asking about candidate’s salary history:
- California – effective January 2018
- Delaware – effective December 2017
- Massachusetts – effective July 2018
- New York City – effective January 2017
- Oregon – effective October 2017
- Puerto Rico – effective March 2017
These cities and states have banned government agencies from asking about salary history:
- Chicago – effective April 2018
- Pittsburgh – effective January 2017
- New Jersey – effective February 2018
- New Orleans – effective January 2017
These cities and states are considering banning salary history questions, or have bans drafted:
- New Hampshire
- Rhode Island
These states have prohibited bans on salary history questions:
The details of the laws differ from location to location. Some forbid employers from asking about past salaries, while others prohibit employers from using this information to set compensation even if it’s discovered inadvertently. Still others prohibit employers from using salary history to screen candidates, but allow them to confirm past salary after making an offer. Notably, California requires companies to provide pay scales for jobs upon request.
How can companies adapt to the new laws?
Whether you’re in an area that has already passed legislation on this issue or one that is considering legislation, the safest course of action is to cease asking candidates to provide salary history information – including base salary, commission, and benefits. It can be tricky to know what to offer, and you don’t want to lowball a promising candidate because you don’t know their salary history. A good (and legal) alternative is to ask candidates about their salary expectations before making an offer.
Companies that are no longer allowed to use past salary to set compensation will have to come up with alternative methods for deciding what to pay new hires. You’ll need to study the market, look at what your competitors are offering, and put values on various skill sets, qualifications, and experience levels. Armed with this information, you can proactively set compensation brackets for various roles in the business.
If more cities and states follow California’s lead in requiring companies to disclose pay scales for jobs, it may be prudent to start looking at your existing brackets and addressing any large disparities with harmonization measures.
Has asking about salary history been banned in your state? I’d love to hear about how the new laws are affecting your recruitment efforts in the comments below.
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