Salary History: Be Careful!

Increasingly, it is becoming more and more difficult to obtain information about a candidate’s salary history. In many states, it is now illegal to do so subject to civil penalties.

The States with Salary History Bans:

Here are the states with state-wide salary history bans: Alabama, California, Colorado, Connecticut, Delaware, DC, Hawaii, Illinois, Maine, Maryland, Massachusetts, New Jersey, New York, North Carolina, Oregon, Pennsylvania (state agencies only), Vermont, Virginia, and Washington. Puerto Rico continues to be the only territory on the list.

Some of the cities go to the trouble of specifically mentioning employment agencies and recruiters being banned from asking for salary history as well as direct-hire employers.

The Legal Code of Virginia has been amended by adding in Article 1 of Chapter 3 of Title 40.1 a section numbered 40.1-28.7:10 as follows: § 40.1-28.7:10. Seeking wage or salary history of prospective employees prohibited; civil penalty.

Why the Salary History Ban?

One of the stated goals of the compensation history ban is to help close the gender wage gap. Women often start out earning less than men in their careers because they are paid based on their previous salaries, which tend to be lower than men’s salaries.

I can see the logic although most of the senior account executives (and top-notch producers) I place are women in the insurance sector.

By prohibiting a salary history inquiry, it also protects potential employees from biased hiring practices based on their previous location and related earnings.

In other words, just because a candidate lives in Salem, VA, should they make less than the same candidate living in Fairfax, VA.?

Can a Hiring Authority Ask About Your Current Salary?

An employer or employment agency cannot ask a job applicant about current or past salary where it is illegal. I have heard (not seen) of some firms asking for salary history on a job application. This could open a firm up to litigation. It only takes one individual to launch a complaint.

How to Comply with Pay History Ban Laws

There are a couple of things that a hiring authority can do in order to comply with salary history ban laws.

First, you must refrain from asking about an applicant’s wage history during the interview process. This goes for recruiters too. I always ask, “What is your compensation range or expectations? They usually respond with, “Well, I am making XXX.” As long as they volunteer the information, you are in the clear.

If you are a hiring authority, it is important to be aware of pay history ban laws in your area – sometimes cities have slightly different regulations than their respective state.

Handling Salary History in Interviews

Be sure to consult with your HR/Legal department and let your hiring managers know about all local laws in effect preventing employers from asking questions related to this topic.

You can do this through internal communication or by posting a notice in a common area where all current employees will see it. This will allow you to avoid any fines or penalties that could come from breaking these laws.

Additionally, avoid relying on past wages when making salary offers to new employees, as some job applicants will volunteer that information without it being asked.

After all, does it really make any difference how much a candidate was making in their previous positions? Why not just pay someone what the job pays? And what the candidate is worth? That’s the whole point of the interview process.

I will continue to keep everyone updated on this as the legislation seems to be picking up momentum right now across the country.

Rob