Could the salary history be … history?
You’re interviewing for a great new job and things are going well — right up until the interviewer asks you for your salary history. How do you answer when you’re worried just as much about pricing yourself out of the market as setting the salary bar too low?
For women and minorities — the biggest victims of the wage gap — as well as everyone else, what you’ve earned in the past may not always be what you or your new job are worth.
Until now, prospective employers have had all the power. New federal legislation introduced last month aims to correct that by prohibiting employers from asking job applicants for their salary history before making a job or salary offer.
On Sept. 15, Congresswoman Eleanor Holmes Norton (D–DC) introduced the Pay Equity for All Act of 2016 (H.R. 6030) with original cosponsors Representatives Rosa DeLauro (D–CT), Jerrold Nadler (D–NY), and Jackie Speier (D–CA). Since then another 14 cosponsors have been added, all of them Democrats.
Because many employers set wages based on an applicant’s previous salary, a press release from Norton notes, workers from historically disadvantaged groups often start out behind their white male counterparts in salary negotiations and never catch up. Even though many employers may not intend to discriminate on the basis of gender, race, or ethnicity, asking for prior salary information before offering an applicant a job can have a discriminatory effect in the workplace that begins or reinforces the wage gap.
Specifically, the bill would authorize the Department of Labor to assess fines up to $10,000 against employers in violation of the law. Additionally, prospective or current employees would be able to bring a private lawsuit against an employer who violated the law, and could receive up to $10,000 in damages plus attorney’s fees.
According to Andrew Bezouska, an attorney with the Labor and Employment Practice Group and Employee Benefits Practice Group of DeWitt Ross & Stevens, employment law legislation has not had much recent success passing in a divided Congress. That will be key to whether this new legislation stands a chance of moving forward.
“If Congress remains divided after the election, the bill is not likely to pass,” Bezouska notes. “However, the chances increase substantially should the Democrats win both the presidency and control of Congress.”
Bezouska says the bill was already referred to the House Committee on Education and the Workforce, but he doesn’t expect it to advance through committee quickly. “Only a one-sided election result favoring Democrats is likely to create momentum for the bill.”
While a federal path forward for such legislation may prove unlikely, one state has already paved the way for a salary history prohibition.
In August, Massachusetts Republican Gov. Charlie Baker signed a similar bill into law that prohibits employers in the state from requesting salary histories during a job interview. A two-year lobbying effort by a coalition of groups, which even included the Greater Boston Chamber of Commerce, helped spur the law’s passage.
Closing the gap
According to Bezouska, salary histories can be used by an employer to set initial wages for new employees. As a result, gaps can develop upon commencement of employment among different employees performing similar job functions, based on the employees’ salary histories. These gaps can remain even as an employee progresses through his or her career.
Bezouska’s colleague Scott Paler, an attorney with the Litigation Practice Group and the Labor and Employment Practice Group chair for DeWitt Ross & Stevens, says the bill’s authors believe that this new legislation will help to avoid perpetuating wage gaps between white men and other segments of the population.
“However, 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,” Paler explains. “So far, early studies have suggested the ‘ban the box’ laws have not yielded the desired effect.”
Good for employees, good for business?
Paler acknowledges the business lobby will likely be concerned about the possibility that companies will face ever more risk on the litigation front if Norton’s bill becomes law. “It’s just one more type of regulation to contend with,” Paler explains. “In addition, they may believe that the new laws are unnecessary in light of existing ‘Equal Pay for Equal Work’ laws and discrimination laws.”
However, Paler notes there could also be positive side effects for businesses.
“It could [actually] help businesses comply with ‘Equal Pay for Equal Work’ laws. If it works as intended, it could also help boost morale among workers who would otherwise be underpaid.”
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