Many state and local legislatures are creating a new ban: one that prohibits employers from asking candidates about their past pay. This will forever change salary negotiations.
For as long as companies and applicants can remember, the most common initial hiring question is past salary. These numbers gave companies insight into determining who made more than the position offered, helping eliminate them from further screening, and offering less money to those candidates that have lower salary histories.
However, policymakers are rethinking this question, believing that it may be helping perpetuate both gender and racial disparities that are present in today’s compensation scale.
Even in 2018, the gender pay gap remains wide, with women only earning around 80 centers to men’s one dollar. Of these women, Black and Latinas see the most significant discrepancy, making approximately 55 to 60 cents for every dollar earned by white men.
This has prompted several states, including New York and California, to move towards banning salary questions in the interview process.
The reviews on whether this will help narrow the gap and create equal pay are mixed. Some companies say that it will improve, while others say that it will have minimum impact on pay equity.
While more states and localities are joining the nationwide trend to ban salary questions, it’s a good time for companies to reevaluate their practice of inquiring about candidates past pay. Consider revisiting company compensation strategies and hiring practices. Rely on the market data to help set the pay rates for positions, which gives companies time to focus on the candidate’s qualifications.
Fines for violating this law vary. For example, Delaware’s law outlines civil penalties that may go up to $10,000 for each offense. New York City is proposing stricter penalties that may go up to $250,000.
To help make sure that your company complies with changing times, check to see if your state or local district has enacted any laws that pertain to restricting questions about salary history. It’s always important that Human Resources departments and company managers know the law.
If your state prohibits discussing salary histories, make sure to update all paperwork that may ask these types of questions.
Here’s a quick list of states that have or are going to be instituting salary history bans: California, Delaware, Massachusetts, Oregon, Puerto Rico, New York City and San Francisco.
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