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How to Comply with Salary History Bans in the Recruitment Process
Most professionals have answered interview questions or filled out a section on a job application about their salary history at some point in their career. While this was a common practice for years, and continues to this day, more than a dozen states have now placed legal restrictions on what employers can ask about a candidate’s previous earnings.
In many cases, these bans prohibit employers from asking about salary history, relying on salary history to determine compensation offers, or retaliating against those who refuse to disclose their salary history. Find out what these laws mean for your hiring process, how things differ from state-to-state, and how to ensure your organization stays compliant going forward.
The Reason for Salary History Bans
Knowing a candidate’s salary history gives employers a bargaining advantage when calculating a compensation offer. For instance, they might use that information to go ahead and offer a salary that’s 10-20% higher than that person’s previous salary, but still under a normal range for that type of position.
“It’s that bias where if you already know that people are underpaid, how is it fair to then decide what someone should make in their next job based on that?” says Amy Zupovitz, Senior Manager Talent Acquisition at Axiologic Solutions. “You can’t judge based on what people were making in the past – it’s irrelevant. The job should pay what it pays.”
In response to such scenarios, many of these statewide and local laws were put in place to address pay inequality and lessen pay gaps. The main idea is that the cycle of being underpaid will continue for women and minorities if they get salary and compensation offers based on previous history. In fact, these new policies have already produced positive outcomes in just a few short years. Harvard Business Review reported substantial pay increases in areas with salary history bans for Black (+13%) and female (+8%) candidates who took new jobs1.
How to Be Compliant
Knowing that there are restrictions on salary history inquiries, what do you actually need to do to be compliant? For starters, it’s a good idea to review the legislation specific to the states you reside in, recruit in, and have open positions in. At this time, there are either local or statewide salary history bans in the following states:
Alabama, California, Colorado, Connecticut, Delaware, District of Columbia, Georgia, Hawaii, Illinois, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Mississippi, Missouri, New Jersey, New York, North Carolina, Ohio, Oregon, Pennsylvania, South Carolina, Utah, Vermont, and Washington.
At minimum you should do the following to ensure compliance going forward:
- Examine your policies, screening/interviewing practices, and job applications to ensure questions about salary history are removed
- Train all your recruiters not to ask or prompt applicants to disclose salary history – this goes for hiring managers too, who might think it’s still routine to ask
- Set pay based on experience, not previous salary history
- Do not refuse to hire on the basis that an applicant won’t provide their salary history
- Be as transparent as possible about your salary range for the position when asked – it’s even better to be upfront about the range in the job posting itself
It’s not uncommon for an employer to be interested in what a candidate currently or previously made in another role. Hearing that salary figure can immediately help a recruiter determine whether an applicant is too expensive or not. If you can’t ask about salary history in your state, how can you find out if you’re in the same ballpark without wasting valuable time?
“When I was recruiting a long time ago, it was okay to ask what candidates were currently earning,” shares Amy Zupovitz. “We don’t ask that now of course, but we do ask what people are looking for compensation wise. If I ask what range you’re looking for, that gives me some idea of whether we can move forward or not.”
You can even go beyond asking candidates about their salary expectations by proactively adding your salary range on your job postings. This will allow applicants to determine if the range is acceptable before they even apply. You know how much you can allot for the position, so why not be transparent? Such transparency can cut down on time wasted with candidates that would ultimately seek higher compensation elsewhere, while also improving your employer brand in an age where transparency is valued highly by job seekers.
Go Beyond What’s Required in Your State Alone
The big question for employers is whether they should have separate policies for different locations, or eliminate salary history questions across the board. At Axiologic Solutions, Amy Zupovitz says, “We treat everyone the same way, so it doesn’t matter what state they’re in.” That’s likely going to be the best way to navigate staying compliant if you recruit across the nation. Otherwise, you’re going to have to be extremely diligent at staying on top of changes to salary history bans and developments.
Even if you’re in a state that doesn’t have these laws, it’s a good idea to voluntarily become compliant now. You may accidently violate one of these salary history bans when remotely recruiting an individual from a state that does have such legislation.
A best practice to ensure compliance across the board is to adhere to the states with the strictest guidelines. If you hold yourself to the highest standards, you won’t have to adjust your practices as often in order to meet what is expected in any given location.
For instance, some of the requirements are specific to all employers, companies with a certain number of employees, or in some cases just state agencies. Similarly, some bans are specific to individual cities and counties, or statewide. And some simply prohibit you from asking about salary history, while others require that you share salary ranges for the position.
Here’s a sampling of some of the state bans and the nuances of their requirements2:
- California – Private and public employers are prohibited from seeking a candidate’s pay history. Even if an applicant volunteers it, it still can’t be used in determining a new hire’s pay. The law also requires employers to give applicants pay scale information if they request it.
- Colorado – Employers may not ask about an applicant’s pay history, nor can they rely on pay history to determine wages. Employers may not discriminate or retaliate against a prospective employee for failing to disclose their pay history.
- Delaware – Employers are prohibited from screening applicants based on past compensation and from asking about salary history. They may, however, confirm that information after an offer is extended.
- District of Columbia – District government agencies are prohibited from asking candidates for their salary history unless a candidate brings it up after an offer of employment is extended.
- Maryland – Employers may not seek pay history, but they may confirm wage history voluntarily provided by an applicant after an initial offer of compensation is made. Upon request, employers must provide an applicant the wage range of the position for which the applicant applied.
- New York – Employers may not seek pay history. An employer may only confirm pay history if at the time an offer of employment is made, applicants or current employees respond to the offer by providing pay history to support a wage or salary higher than that offered by the employer.
As you can see, it would be a daunting undertaking to tailor your recruitment strategy to each individual location your applicants reside in. To be on the safe side, always refrain from asking about salary history, offer salary and compensation based on experience, and provide candidates with a salary range for the position when they ask.
While it may seem strange to avoid salary history questions, especially if you’ve been doing so for years, it will eventually be as natural as avoiding other taboo topics. “In recruiting we have to be aware of what we can and cannot ask,” reminds Amy Zupovitz. “You can get yourself in trouble if you ask things that are not related to the job.”
So add questions about salary history to the list of things you legally can’t ask about, alongside questions about marital and pregnancy status, or race, religion, or sexual orientation. In the end, it’s another positive step towards equal employment opportunities for all.
