Pay Inquiry Bans Give Some Employers Compliance Headaches

Complying with the growing number of state and local laws that prohibit employers from inquiring about job applicant pay history can be complex and even overwhelming for employers. 

Despite their support for the underlying goal of rooting out pay inequities, employers face various challenges in dealing with state and city laws that differ on the specifics of barring pay history inquiries, noncompliance penalties, and other rules regarding hiring and pay practices. 

Legislatures in more than 40 jurisdictions last year considered approximately 400 bills targeting pay equity, and in 2018 thus far at least 23 states have introduced pay equality legislation, Corinn Jackson, knowledge management counsel for Littler Mendelson in Los Angeles, told Bloomberg Law. 

There seems to be a general false assumption on the part of lawmakers that pay is specifically pinpointed for each position at a company, Daniel V. Yager, HR Policy Association president and chief executive officer, told Bloomberg Law. Pay is mostly consistent for entry-level positions at any given company, but as people move up the ladder to manager, vice president, and senior executive positions, "there's a much broader range" that's based on "a lot of different factors," he said. 

Laws Contain Vague Provisions

The HR Policy Association represents chief human resources officers at over 380 large employers in the U.S. and globally. In a new report, it found that members are finding it almost impossible to monitor, operate within, and comply with all of the complex and varying pay regulations. In particular, association members stated that many of these laws contain vague provisions, leaving the practical application of the statute to employers to interpret. 

Moreover, members indicated that laws across state lines often conflict with one another, creating challenges as large, multistate employers seek the implementation of uniform policies, according to Yager. The report was conducted in partnership with Littler Mendelson's Workplace Policy Institute. 

To date, California, Oregon, Massachusetts, Delaware, New York City, San Francisco, and Puerto Rico have all enacted laws banning employers from inquiring about an applicant's salary history. The intention of the laws is to halt salary inequities women and minorities may carry with them as they move from employer to employer. 

The laws are meant to help candidates in the hiring process, but they may be creating a challenging and frustrating applicant experience, Alison Avalos, director of Total Rewards Strategy for WorldatWork, told Bloomberg Law in an email. WorldatWork is an HR association based in Scottsdale, Ariz., focused on compensation and benefits. 

Employers Develop Alternate Strategies

In lieu of asking for pay history, employers are devising alternative strategies. 

One popular solution is to fill in the salary knowledge gap by asking for salary expectations from potential new hires, but that could be construed as asking for history, Jackson said. Employers should tread lightly in jurisdictions where they can't ask about prior pay because more times than not a candidate's pay expectation is based on what they were most recently earning, she said. 

Meanwhile, to address internal pay inequities, companies are increasingly turning to audits of their compensation practices. Organizations can work with their attorneys and advisers to determine whether there are standards and controls in place so that two different people who are equally qualified and capable get the same offer regardless of current pay, race, gender, age, or even inside connections, Avalos said. 

Employers can also target pay equity through recruiting diverse talent, and training employees thoroughly on hiring processes so that people are promoted consistently and fairly, Jackson said. These strategies would help employers ensure no inadvertent inequities have arisen, she added. 

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