A Frank Talk to Multi-State Employers About Salary History

Multi Employers

Multi-state employers may need to fine-tune their talent acquisition processes because of the growing wave of state and local laws prohibiting employers from asking job applicants about their salary history.

“There’s a patchwork of increasingly aggressive pay equity laws rolling across the county,” said Mickey Silberman, a management attorney with Jackson Lewis in Denver. He spoke during a March 14 session at the Society for Human Resource Management’s Legal & Legislative Conference in Washington, D.C. 

Salary History Bans Gain Traction

California, the District of Columbia, Massachusetts, Philadelphia and Puerto Rico have passed laws prohibiting employers from asking job seekers about their previous salary history. Pennsylvania, Texas, New Jersey and Texas are considering similar bills, Silberman said. Los Angeles also is completing a feasibility study on a workplace salary history ban.

For employers, gathering salary history is a means of establishing a salary offer to entice the leading job candidate to the company. Yet, pay equity experts argue that a salary offer that’s benchmark based on prior salary history can perpetuate the gender pay gap.

“Last year, women earned about 80 cents for every dollar earned by men,” Silberman said. “Experts are trying to figure out why the progress on the pay gap has stalled.” 

Develop Consistent Approach 

The state and local laws preventing employers from seeking past salary history aren’t limited to job applicants who live in those jurisdictions, Silberman said. The laws generally apply to the location of the job.

Consequently, multi-state employers must consider how the laws will affect the company’s corporate consistency as to talent acquisition. The company has to determine if the application process is going to be consistent in all of its establishments by eliminating salary history inquiries for all job applicants, or to create different applicant processes state by state due to a growing number of laws on salary history bans, he said.

“Let’s say I am an electrical engineer based in Denver who is willing to relocate, and I want to work for your company. I go to your website and see that you have a job opening for an electrical engineer in both Miami and Boston. Now you can imagine the confusion, from the applicant experience, when applying for the openings in both cities. One online application is asking prior salary history, while the other is explicitly not mentioning previous salary history,” he said. 

Rely on Job Value 

Some employers do worry “when I ask them not to think about inquiring about past salary history,” he said. “It’s easier for an employer to argue that the company doesn’t base salary offers on past salary histories because the salary history question isn’t raised by its recruiters or hiring managers during the application process.”

According to Silberman, it’s better for employers to rely on the value of the job, rather than what the applicant was paid by prior employers. “You have to separate two concepts: what is the value of the job in the marketplace and the value that the applicant will bring to the position. And that’s unique,” he said

“You can continue to pay people differently as you bring them in. But ideally, it should be tied to the job-related attributes that they are offering you. You are paying me more because I am going to provide greater valued based on those attributes. If you are paying me more because my previous employers paid me more, then that is carrying forward the gender pay gap that exists,” Silberman added.

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