The Salary History Ban: Your Guide to Dealing with This Dreaded Interview Question–GUSTO
It’s the interview question that makes millions of employers and candidates shudder. No, it isn’t about experience, references, or culture fit… not even about career growth expectations. It’s about (eek!) salary history.
Not the easiest thing to ask for, right? But employers rely on it as a way of understanding the market rate for specific roles and gauging an applicant’s skill level. It’s important to remember that there’s lots of baggage that goes along with asking for someone’s salary history—baggage that affects both the candidate and employer.
Here we’ll cover best practices for making sure your company complies with the new salary history laws, including an overview of where it’s active so you can see if it applies to you in the first place.
Let’s break it down.
What is the salary history ban?
Imagine you’re conducting a job interview. It’s going great, and you want to shift the conversation toward salary negotiations. Several things are running through your mind, like keeping the candidate excited about the role and staying within budget. So you hold your breath and ask the dreaded question: “How much are you currently being paid?”
Here’s the dilemma. If the candidate answers the question, they could risk anchoring their future compensation to their current salary—whether or not they’re being paid appropriately. Or if they refuse to answer, there’s a chance you may assume they make less than they actually do or even find them uncooperative.
In a survey of over 15,000 respondents, PayScale found that women who didn’t offer up their salary history were paid 1.8 percent less than women who did. On the flip side, men who didn’t reveal their previous salary were paid 1.2 percent more. This double standard between men and women may be the result of gender bias, according to PayScale. Clearly, something isn’t working.
The proposed solution? Ban the question altogether.
The salary history ban makes it illegal for employers to ask candidates how they are currently or were formerly compensated at work. What qualifies as “compensation” is different for every state and city (we’ll cover that part soon).
Why it’s being rolled out
Gender pay inequality continues to be a problem in the United States. A Glassdoor study showed that women still earn 76 cents to the dollar men earn.
The salary history ban is trying to tackle one part of the problem: to prevent current or previous pay inequality from following a person throughout their career. Determining a candidate’s compensation based on their salary history can perpetuate existing wage inequalities that are the result of gender bias or discrimination. So, some think it’s best to take salary history out of the equation altogether.
Where the salary history ban currently exists
Remember that this isn’t a nationwide ban. Below are some of the cities and states that have enacted the salary history ban so far:
- California: Starting Jan. 1st, 2018, employers can’t ask for an applicant’s compensation history, either in writing or verbally. Compensation includes both salary and benefits. If reasonably requested, employers need to also provide a pay scale for the position in question.
- Delaware: Since Dec. 14th, 2017, employers haven’t been allowed to ask for an applicant’s compensation history until after a job offer has been made and accepted by the applicant. Compensation is defined as monetary wages, benefits, and other methods people get paid.
- Massachusetts: Starting July 1st, 2018, employers can’t screen applicants based on compensation history or ask for it. Compensation includes benefits, salary, and other types of payment. Employers are also banned from getting the information from the applicant’s current or former employer until after an offer has been officially accepted. Instead, employers have to publish salary ranges based on qualifications and skills related to the role.
- New Orleans: As of June 2017, city agencies aren’t allowed to dig around for applicants’ pay histories.
- New York City: As of October 31st, 2017, employers are barred from asking or searching for an applicant’s compensation history. This includes wages, benefits, and other forms of compensation.
- Oregon: Starting January 1st, 2019, employers can’t ask for compensation history or screen applicants based on it. Compensation includes wages, salary, bonuses, benefits, fringe benefits, and equity-based payment. If a company violates this law, employees are owed unpaid wages.
- Philadelphia: Despite being the first U.S. city to pass such a law, the bill is temporarily on hold because of a lawsuit filed by a local business. Therefore, it’s not currently enforced.
- Pittsburgh: As of March 2017, city agencies cannot ask applicants for their pay histories.
- Puerto Rico: As of March 2017, employers can’t ask about an applicant’s compensation history unless the applicant offers the information on their own, or a job offer has been offered and accepted by the candidate.
- San Francisco: Starting July 1st, 2018, employers can’t ask applicants—contractors and subcontractors included—for their compensation history. Employers also can’t disclose a current or former employee’s salary history without that person’s explicit permission.
So what does this mean for you?
If your business isn’t located in any of the cities or states above, you’re in the clear (as of December 2017). If it does, there are a couple actions you should take.
- First, review your hiring process. At no point should you require an applicant to disclose their salary history in writing or in an interview. Also, make sure related sections aren’t lurking in any internal hiring documents, like interview question templates or reference emails. Lastly, don’t rely on an applicant’s salary history, even if voluntarily disclosed, when determining whether or not to extend a job offer.
- (Re)train your staff on the new law. Make sure your team is aligned on new hiring requirements and which questions are and are not appropriate. Double-check the statutes under your state or city’s law and ingrain it in your team.
- Refrain from releasing salary information for past employees. Don’t release a former employee’s salary history without written authorization from that employee. There may be some exceptions to this rule, such as when salaries are publicly available or part of a collective bargaining agreement. Check your local and state laws to see what exceptions may apply.
A shift in mindset
Salary negotiations are uncomfortable for everyone involved, and gaining the candidate’s trust throughout the process is key to setting them up to be a rock star on your team. The good part? Simple language tweaks can easily achieve this.
For example, instead of asking for salary history, tell the candidate outright what the salary range is for the role, and then see if they want to continue the conversation. Keep in mind that the gender pay gap can still rear its ugly head even if people know the average salary range for the role, found a study from Hired. On average, women tend to ask for less than men, regardless of their experience.
The takeaway? Someone’s salary history should never affect their compensation in future roles. Before you ever bring your candidate into the office, research compensation standards for the role you’d like to fill and consider their skills, background, and education to determine a final offer. Take this data-driven approach and be fair and transparent; you’re bound to gain your candidate’s trust throughout this nerve-wracking (and exciting!) process.