Contact Us
Login
877.896.9523
Menu
Contact Us
Login
877.896.9523

How Salary History Bans Will Change the Hiring Process

May 17, 2018 1:00:00 PM

It's a common question many people are asked during the interview process, “How much are you making at your current job?” Many recruiters, hiring managers, and the like, use this as pre-screening or interview questions in order to get a better grasp on what their company can offer the prospective employee. Obviously, this favors the hiring company looking to save some money on an employee by offering them more money than they are making now, but less than they were willing to spend.

However, there has been a long-standing debate regarding salary histories and how they address pay discrimination and pay inequities (such as women earning less than men for similar roles). For example; if a company uses the salary history of an employee to determine a pay rate, they are enforcing any existing pay gaps that may be based on old rules, discriminations, or other outdated identifiers. Many lawmakers believe that if employers are disallowed to ask about salary history, compensation is much more likely to be based on skill and not past experiences.

As of March 2018, six states, several cities and counties, and Puerto Rico have all passed laws restricting how and whether employers can use a candidate’s salary history in making compensation decisions. States where private employers are restricted in their use of salary history include California, Delaware, Massachusetts, and Oregon. Other states, such as New Jersey and New York, prevent state entities or state agencies from utilizing this information. San Francisco and New York City have also implemented laws which impact a private employer’s ability to ask candidates questions about their wage history.
(ADP Research Institute , 2018)

The quote above shows the start of a movement towards a merit-based compensation rule that many legislations have been pushing for some time. Many other cities and states are already considering adopting this legislation as it becomes more widespread.

There are exceptions to this rule; some laws allow an employer to ask about salary history if the prospective employee:

  1. Voluntarily agrees to share the information
  2. Once a conditional offer or employment with compensation has been given to the employee
  3. Has accepted an employment offer

Like the laws passed above, these exceptions seek to favor a merit-based compensation offer rather than one that is history-based.

Considering how vital salary history is to current hiring practices many employers will have to re-evaluate how they recruit new employees. The most obvious problem would be not knowing what to post as compensation for a new position due to not knowing the previous pay of any applicants. A simple solution would be to base the value of the position on a public market value instead, or only deciding after a candidate is interviewed and their skills are tested.

The vast majority of jurisdictions still allow salary history to be asked freely. However, many more seem to be headed towards a form of a salary-history-ban law very quickly. It’s in an employer’s best interest to keep tabs on these changes and even start to rethink the compensation aspect of their hiring process.

What do you think about the salary history ban? Should an employer have a right to know a prospective employee’s history, or should compensation be solely based on skill? Let us know your thoughts on the Proliant Twitter, and hit Follow to be notified of all our new updates.

 

Bibliography

ADP Research Institute . (2018, April). Retrieved from ADP: https://www.adp.com/tools-and-resources/adp-research-institute/insights/insight-item-detail.aspx?id=4F8D9397-0CAB-4D0E-9C00-AA33C60CBE86

 

 

 

 

 

No Comments Yet

Let us know what you think