New York City joined Philadelphia, Massachusetts, and more than 20 city and state governments in passing legislation that bans employers from asking about current or past salary in April this year.
The policy looks to level the pay playing field in the workplace by unfettering women and minorities from the lower salaries they may have accepted earlier in their careers. The measure is based on the idea that if an applicant was the victim of pay inequality, by asking about salary history and then basing an offer on this amount, recruiters perpetuate this discriminatory cycle.
And while some experts think salary history is not essential to making a hiring decision, others remain in favor of discussing salary history and still others think these laws change nothing.
I caught up with a number of business leaders to discuss whether discussing past salary is kosher, or even beneficial to making their next hire.
In Favor of Discussing Salary History
“Prior salaries are part of an employee’s history,” said Shelby Williams, Marketing Coordinator at GetPayroll. “Not being able to ask salary history is like not being able to ask employment history. The ability to seek and get a good salary in a local area is an important characteristic of a potential employee. It has to be tempered with where the potential employee was employed and by whom they were employed. If a client is hiring someone in Texas and their potential employee was formerly in San Jose, the employer is going to look at the salary and laugh. They don’t pay in Texas like they do in California or New York because of the cost of living.
As far as using previous salary as discrimination, I find the idea silly. I have seen women and minorities that I think are overpaid as well as underpaid, and white men the same.”
“In this age of employees, especially millennials, wanting transparency with their bosses/employer, it should work both ways,” said leadership coach Debra Benton. “Companies should get comparable transparency with potential employees. Another example of too much government intrusion into business.”
Past Salary is Simply Not Valuable Information to a Hiring Decision
“While this law has merit for candidate advocacy, does it actually serve the candidate? We stopped asking salary history long ago,” said Juventio Chief Marketing Officer Bart Zoni. “From my perspective, demanding salary history is an Easy Button approach to hiring, and it reduces humans to a number that ultimately says very little about their value to your organization. These new rules may make hiring more challenging, but mainly by humanizing the process. This is a good thing.”
“As a management professor who specialized in HR, I never thought asking questions about a candidate’s salary history was very useful,” said Timothy G. Wiedman, D.B.A. In general, candidates have a long history of embellishing their backgrounds, so self-reported salary histories are not necessarily reliable in the first place. But more to the point, there’s no ethical or practical way to verify self-reported salary histories since virtually no former employers would ever divulge that sort of information during a reference check…. Thus, in my opinion, recruiters who asked applicants to provide salary histories were simply fooling themselves if they thought they were getting much useful information. So when city councils or state legislatures pass laws that ban asking questions about past salaries during the hiring process, I consider it typical political posturing designed to get headlines and/or show voters that their politicians are doing something useful. And those questions can easily be replaced by something much more concrete, such as: What are your salary requirements? Or, what do you expect in terms of a total compensation package? Questions of that sort would accomplish the legitimate goals of recruiters, and they would surely pass legal muster.
In the final analysis, I doubt that passing laws of this sort will accomplish much of anything in terms of helping job applicants, but it will give politicians something to talk about during their subsequent political campaigns.”
These Laws Change Nothing
“Routinely new employers request a comprehensive background review that includes: – social media memberships and all posts, publishings and counter thread comments,” said AEGIS FinServ Corp™ President Jim Angleton. “Photos, music shared, and information placed by the candidate and even existing employee can be found in minutes. Ninety-nine % of the time, former employees leave comments about their former or present employer. You can always gain much information that way. Additionally, all credit repositories collect credit and other data on individuals. Many credit card companies, banks, and insurance companies will obtain a complete and comprehensive credit report. It will include income, expenses, late payment, collection matters etc. As you can see, information is still at the fingertips of employers.”
The effect of laws banning salary history is yet to be seen. I will be keeping my eye out for related lawsuits in the news. Personally, I think compensation starts with the value the job creates, and not how much a candidate previously made? But as you read today, the hiring discussion is never that simple. What do you think: is discussing salary history taboo? Will these laws help create better hires?