Sayonara, salary history?
While there’s no indication — yet — that a ban on asking job applicants what they currently make is headed to Wisconsin, the wage-leveling trend is growing in other states and major cities across the U.S.
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“How much money do you make?”
In any other circumstance outside of a job interview, that question is a rude one. While commonplace in an interview setting, it’s still often softened to something a little less off-putting like, “What are you earning in your current position?”
New initiatives in cities and states around the country are seeking to put an end to that uncomfortable question with a ban on asking for an applicant’s salary history. It’s not a new concept — in October 2016 IB wrote about a federal proposal introduced in Congress that would prohibit employers from asking job applicants for their salary history before making a job or salary offer.
While that proposal remains stalled in a Congressional committee, more local efforts are underway across the U.S. to nix the salary history question altogether and create a more level playing ground for applicants seeking to improve their pay.
A ban on the interview question “What's your current salary?" has been in effect for about a week in New York, a move that will soon be followed by Massachusetts and San Francisco, CNBC reports. The salary-history law is already in effect in New Orleans, Oregon, and Puerto Rico.
The new law aims to shrink the pay gap between men and women by preventing the latter from being pigeonholed by a previous or current salary. Still, employers can find ways to skirt the law, for example, by asking what a candidate hopes to make in their next role.
Ashlie Johnson, an HR consultant and owner of Madison-based Brooke Human Resource Solutions, says that while she has not heard any discussion about the adoption of this legislation locally in Madison or Wisconsin, the intent of this type of legislation is to address the pay gap by ensuring that low pay doesn’t follow women, or racial minorities, from job to job and snowball over time. “However, it is so easily circumvented by slightly changing the language of the question, I find it doubtful that this effort alone will have the desired impact.”
That’s a sentiment echoed in IB’s report last year from Scott Paler, an attorney with the Litigation Practice Group and the Labor and Employment Practice Group chair for DeWitt Ross & Stevens, who noted lawmakers around the country had similar lofty aspirations regarding “ban the box” laws — laws precluding employers from inquiring about criminal history information early in the hiring process. “So far, early studies have suggested the ‘ban the box’ laws have not yielded the desired effect.”
The group that stands to benefit the most from this type of ban is prospective employees who are making a step upward in their career path, or those who may be moving from a market where the cost of living is lower than in their new home city, Johnson explains.
“I don’t believe that this ban truly provides more negotiating power than these candidates had before the ban was enacted, but the ban does now allow candidates to potentially inflate their desired salary without having to answer the question, ‘Why should you make so much more here than you did in your previous role?’”
It is important to note here that employers can still ask about how much an employee made in annual bonuses if they are in sales or other commissions-based sectors, adds Johnson. “Employers can also ask a candidate to disclose their previous salary after an offer is made. If they actually lie during in the interview process, they could then legally be fired. These types of sticky situations are easily avoided when employers have more transparency from the beginning of the process.”
Johnson also notes there could be unintended consequences of salary history bans becoming the norm.
“One that comes to mind for anyone working in an HR role — and recruiters specifically — is that this legislation could potentially force them into a lengthy recruiting process with a candidate who is already earning more than what the employer has budgeted for the position,” explains Johnson. “The most common reason for asking a candidate for their salary history is to quickly weed out those candidates who are ‘too far out of reach’ financially. This saves both the candidate and the recruiter from wasting one another’s time, and it also saves the employer the wasted effort expended by their recruiting team.”
Another unintended consequence that Johnson sees arising from this type of local legislation is the impact it has on larger organizations that may have locations in multiple cities or states. A salary history ban could force the larger employer to manage potentially inconsistent hiring practices, or change their entire practice to accommodate one local jurisdiction’s decision to implement this ban.
“There is also the cost employers will incur in order to be compliant,” Johnson says. “The ban goes beyond simply asking, or not asking, the question in an interview. Many employers today use complex online application systems to collect candidate data. The question of previous salary is often included in these online forms. In order to be compliant an employer will have to make changes to their HRIS/Applicant tracking systems, thus incurring costs for internal IT or external vendor services.
“There is also the cost to update training materials. While small companies may be more agile when it comes to updating their internal processes, larger corporations can spend thousands on updating training materials, as well as the time cost of re-training recruiters and managers to follow new internal processes.”