Asking About Salary History in Your Hiring Process?

This Practice May Soon Become Illegal

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If you currently ask about salary history in your interviews, you are not alone. In fact, a woman I know who is job hunting recently told me that in a phone interview she felt the need to lie about her salary because she knows she is currently vastly underpaid. Because of situations like this, the Equal Pay Act was enacted, but state law makers have decided that the Act isn’t conclusive enough, and are broadening their protections.

Areas Who Have Already Passed Laws

There will be major changes to the state, and even city, laws in the coming years. For example, San Francisco has an ordinance set to ban relying on salary history information, even if the applicant is willing to disclose the information. This ordinance is set for a hearing on June 7, 2017 before the Government Oversight Committee. After the hearing, it will then go through two rounds of voting before it is finalized. Currently, as a whole, the state of California prohibits employers from using an employee’s salary history as the sole basis to justify a pay gap. Salary expectations, however, are still open for discussion.

California is not the only state that is passing such laws, with 15 states proposing or have already made changes to their laws. One of those states is Massachusetts, which is scheduled to become active on July 1, 2018. This law will prevent employers from asking a prospect about their wage and salary history until after an offer of employment and negotiations are underway. However, this information is only able to be disclosed with written permission from the applicant.

In New York City, the applicants have to disclose their current or prior salary “willingly” and “unprompted” in order for the salary information to be recorded. The law changes in the city are particularly important, because intentional violations will charge employers with a $250,000 penalty, while even and unintentional violation will incur a $125,000 fine. New York City’s ban goes into effect on October 31, 2017, which means that planning should begin now, to allow time to implement policy and hiring practices.

How To Protect Your Company

The first step will be to research your current hiring practices to make sure you are removing questions about current and prior salary. Some common places this can be found is in phone screening, interview templates, compensation documents and even the applications themselves. It will also be important to touch base with us (your background screening company) to make sure that we adjust how salary history questions are currently being used. This way we can develop a best practice for background screening that fits the individualized needs of your company.

As always, if you would like to contact us to discuss how this could affect your background screening process with us, and for information on how we can help you stay compliant. If you would like to know more about which states are currently proposing changes to their laws, please see this Pay Equity Reference document from Seyfarth Shaw LLP.

*UPDATE (7.5.17): Delaware and Oregon have also joined the above mentioned states and cities in enacting their own versions of a salary history ban. Read more from our friends at SHRM.

 

Authored by: Emily Kerswell