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HR Insights: Banning Salary History From Hiring Practices

Posted by Jeffrey Forbes on Apr 30, 2020 9:00:00 AM

HR Insights_ Banning Salary History From Hiring Practices

State governments have started to take strong action against what they view as unfair employment practices. Legislatures are passing new laws about hiring practices quite frequently over the last few years. These laws seek to create greater fairness in the hiring and salary negotiation process in order to overcome inequalities such as the gender pay gap and other issues.

A Staple In Past Hiring Procedures

One increasingly common type of legislation in this sphere bans employers from asking questions about a job applicant’s pay history. Approximately twenty different states have passed laws banning this practice. New York became the most recent state to have such a law take effect on January 6, 2020. Like with all similar types of legislation, many of those twenty states have taken different approaches to the ban, making it even more complicated for multi-state employers to ensure their compliance across all jurisdictions.

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Salary History And The Wage Gap

Legislators have become increasingly concerned with addressing the persistent wage gap between men and women. While other laws continue to ban the practice of paying men and women different amounts for the same work, the wage gap has persisted. So lawmakers have turned to other means in an attempt to address the issue.

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A Perpetuating Problem

The reasoning behind these bans holds that salary history questions perpetuate wage inequalities across decades. If two different people with the same qualifications were hired for the same job in 1979 and one started out making more money, that inequality of starting position will replicate itself each time the two people change jobs as future employers continue to pay the higher earner more money for no reason other than they were making more money at their last job.

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States Differ In What Is Allowed

As mentioned earlier, these laws can vary significantly. Alabama, for example, merely forbids employers from refusing to hire or promote job applicants who refuse to provide a pay history. The City of Philadelphia allows salary history questions, but forbids employers from basing pay negotiations on that salary history. Many states have banned not only the asking of pay history questions but attempts by employers to obtain the information through other means. Still other states allow salary history questions, but only after making a job offer.

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Pros And Cons Of The Question

The effectiveness of these bans has been called into question by opponents of the legislation. Some argue that the laws are easily avoided. Others view it as simply additional bureaucracy to make the hiring process longer and more expensive for businesses, as more time must be taken up by salary negotiation and trying to ensure that job candidates are in the right pay range.

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Staying Current With Compliance

As new laws impacting the hiring process are passed, employers must stay up to date to ensure their compliance and avoid costly lawsuits or regulatory actions. Changes like this can be particularly difficult as they often involve re-training managers and those in the hiring process on top of changing policy and procedures.

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Topics: HR Insights, Small Business, Hiring Tips, Laws for Employers, Workplace Policies, HR