There is a growing wave of cities that are getting out ahead of the national government by banning employers’ ability to ask about salary history during the interview process. Many of those bans are starting to take effect, or will take effect soon. Here is what you need to know in order to remain compliant.
“Salary history should have no impact on what your paid for your position. It should be based on skills and experience. Hiring companies should have pay scales that clearly define the range of compensation for that position. Hiring employers should be more transparent around sharing the pay range with the candidate and then agree or not agree to continue the interview process,” says Sharon Tsao, EVP, Contemporary Staffing Solutions.
The National Landscape
In 2016, the Pay Equity for All Act was introduced in an effort to close the wage gap for women and minorities. If passed into law, the bill would allow the Department of Labor to levy fines against any employer who violated the law by asking salary history questions. Employees and candidates would also have the ability to sue employers who violate the law for up to $10,000 plus legal fees. So far, that bill has gone nowhere fast. So, for now, federal law still allows employers to ask salary history in the interview process.
The Local Landscape
Even though federal regulations haven’t changed, many cities and municipalities have decided to move forward with their own restrictions. In 2016, Philadelphia was the first city to pass a ban on salary history questions. The ban also prohibits retaliation for failing to answer questions related to salary history. However, thanks to a legal challenge by the Chamber of Commerce, the law is currently blocked.
In New York City, Mayor Bill de Blasio signed an executive order banning city agencies from asking applicants what they’ve earned in the past, and the City Council is currently working on a measure that would extend that ban to all employers. In New York State it is illegal for state agencies to ask about salary history or to share any salary history previously collected on current employees.
Massachusetts was the first state to pass a ban against salary history questions in 2016, and since that time similar bills have been introduced in the State Houses of Texas, Virginia, New Jersey and Pennsylvania. California and Delaware also passed statewide bills that take effect in 2018.
Why Salary Questions Matter For Employers
The motivation behind salary history bans lies in the wage gap that exists for women and minorities. The thought is that if a woman or minority currently earns less than white men of the same skill level and background, asking about salary history will continue to keep those employees earning less.
However, employers have valid reasons for asking about salary history. First and foremost, it is a waste of time, money and resources to take a candidate through the hiring process if he or she currently earns significantly more than the employer is offering. Salary is important to both the job seeker and the employer, and open, honest discussions about salary are one of the most critical pieces of the hiring puzzle. Small companies can’t afford to pay the same rates as large companies, and they often use questions of salary to begin negotiations and develop perks and benefits that will help them compete for top talent.
If you need to polish your hiring and retention processes, or if you are looking to staff your HR department with top talent who can make a positive difference in your organization while keeping you compliant, connect with the professional recruiters at Contemporary Staffing Solutions today.