"So, what does your salary history look like?"
It's a common interview question that many of us have been asked over the years. It's almost as cliché as "What is your greatest weakness?" or "Where do you see yourself in five years?", but not quite.
However, in recent years, this previously straightforward interview question has become rather controversial.
Concerned with how local and federal employment regulations could affect your business? Read: How to Prevent Costly Wage & Hour Lawsuits
Critics argue that when an employer bases the salary of new employees on their previous earnings, the practice can perpetuate cycles of wage discrimination. So, if a candidate was paid a lower wage at their previous employer due to bias or bigotry, your firm could further discriminate against them unintentionally by making hiring and salary decisions based on this artificially lowered wage.
Admittedly, the historic purpose of requesting previous salaries wasn't rooted in discrimination but was focused on the various advantages that such a question offers. By tracking a potential hire's wages over the years, in theory, your business could develop an impression of the candidate's:
While there are pros and cons to requesting an applicant's salary history, depending on where your business is located, the question of whether you should pose the request may have already been answered for you.
Last year, the governor of Massachusetts signed a bill that prevented businesses within the state from requesting a potential employee's salary history. And since the beginning of this year, both Philadelphia and New York City have banned the practice as well. Similarly, California restricted how salary information could be used when considering, hiring, and compensating job candidates.
Even if your organization doesn't operate in these regions, it's very possible that similar legislation will affect you. Reportedly, eight states -- Illinois, Maine, Maryland, New Jersey, New York, Pennsylvania, Rhode Island, and Vermont -- are considering similar measures, and Congress entertained proposed legislation for a national ban last year.
Whether you choose to continue requesting salary histories from job candidates or suspend the practice, these actions can help your business create a fair, equitable environment for all employees:
Ideally, every employee in your firm has a job title and clearly defined responsibilities. Along with these details, create appropriate pay ranges for each role as well as compensation guidelines that account for the employee's education, experience, seniority, merit, and productivity. When salary ranges and compensation plans are better formalized, unintended pay disparities are less likely to arise.
Many of these new laws and proposed regulations are focused on limiting the potential impact that gender and racial biases can have. Rather than waiting for legislation to force policy changes, take action now.
Evaluate existing company policies and processes that could be unintentionally discriminatory or exclusionary. At the same time, employ tools or training to help staff and key decision makers to identify and counteract their own unconscious biases.
To further remove the potential of bias influencing hiring, promotion, and other compensation discussions, consider evaluating candidates and employees as a panel rather than having a single individual make these decisions.
Considering that the Philadelphia regulation banning salary history requests has been temporarily stayed pending a legal challenge from the city's chamber of commerce, the future of this legislative trend is still undecided. By keeping abreast of the news and having a transition plan ready to act on, your organization can be well prepared no matter what your local legislators decide.
By taking measures to identify and remove potential avenues for conscious or unconscious bias -- whether they are related to salary histories or not -- your organization can create a healthier, more engaging, and more pleasant environment for current and future employees. And happier employees tend to be more productive.
If you would like to learn more about how we can better equip your managers and key decision makers to make sound choices surrounding compensation policies, request a demo of our wage & hour courses today.
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