Salary History Bans Gain Traction

Salary History Bans Gain Traction

CJC Compliance, Employment, HR News, Legislative Updates

Philadelphia became the first city in the United States to ban private-sector employers from asking job candidates about their salary history when Mayor Jim Kenney signed the law Jan. 23, giving city-induced salary history bans traction. The law aims to address gender-based wage disparity and will go into effect May 23.

The Philadelphia City Council was inspired by a Massachusetts pay equity law signed last August that included a ban on asking about salary history, but that law doesn’t take effect until 2018.

In November 2016, New York City Mayor Bill de Blasio signed an executive order prohibiting city agencies from soliciting salary history during the job application process, and earlier this year New York Governor Andrew Cuomo did the same. Democrats at the national level proposed a federal ban in September 2016, but that proposal was mooted as Congress ended its session.

Supporters of salary history bans in hiring contend that because women have historically been paid less than men, asking for a salary history continues the practice of paying women less throughout their careers. Talent acquisition professionals would argue that asking about previous salary isn’t intentionally discriminatory and banning the practice would upend what’s become a common method used during screening interviews to determine candidates’ past compensation and desired pay as a quick way to whittle down large numbers of candidates for open jobs.

Implications for HR

Private-sector employers can prepare for the salary history ban trend by reviewing recruitment and hiring practices, and training recruiters and hiring mangers on salary negotiations in the interview process, and how to set fair salary levels for specific positions using external labor market data. For affected cities and states, prior salary inquiries on job applications should be removed and recruiters trained on any salary history prohibitions.

Some industry experts believe that crunching labor market data to set salaries instead of relying on past compensation will lead to smarter compensation plans that better align with business strategy, is more equitable for candidates and can be backed up if disputed.

Implementing a market-based data-driven compensation structure can also illuminate where salaries and the market do not align, close wage gaps and beef up competitive workforce planning.

Remember that job seekers have access to data, also and are increasingly using sites like Glassdoor, and to see what similar positions offer.

Employers are advised to be aware of any relevant state and local pay equity legislation.

For assistance or questions surrounding pay equity legislation, or with the development of a compensation strategy contact CJC Human Resource Services.