Salary History Ban 101 For Hiring Organizations

Posted on 08-02-2018
salary history bans

As executive search industry leaders, we proactively monitor legislative changes influencing recruiting and hiring. Across the country, cities and states are enacting salary history bans, forbidding hiring authorities from asking job candidates about their compensation and benefit histories—this new legislation will be “game changing” for hiring organizations.

Though details differ, most of these rules prohibit any type of activity that may reveal a candidate’s current or previous compensation arrangements. These restrictions include requesting the information from the job prospect, the candidate’s previous employer or agents, employees of the previous employer, asking for a W-2, and in some cases, even conducting a search of publicly available records or reports for the purpose of obtaining an applicant’s salary history.

The impetus for the legislation is to enable job seekers to negotiate a fair salary based on their skills and break the cycle of income equality that has been prevalent in the workforce, particularly for women and minority candidates. Advocates of the new laws say “organizations should price the position, not price the person.” Other proponents look forward to strictly market-based approaches to salary determination. In essence, this will require employers to “show their work” by making a clear, market-based case for what they want to offer selected applicants.

Historically, hiring authorities and recruiting firms have asked the compensation question to “qualify” a candidate moving forward in the process, or even to get the “best priced” job seeker from a list of similarly experienced and educated applicants.

Today’s professional and executive searches are often nationwide in nature. “Position open” postings on websites and job boards often draw interest from candidates across the country. Remote positions are also becoming more common, with employees working from home for employers in other states. With this in mind, making the compensation query as a qualifying question for hiring authorities to ask potential candidates is becoming more and more a legal slippery slope.

Five Salary History Ban Best Practices for Hiring Organizations:

  1. If you’re working with Kirby Partners on an executive search, realize that with the new legislation enacted or planned across the country, compensation histories will not be included with submitted candidates’ information packages.
  2. Adjust your process to now include “expected” or “desired” compensation packages instead of historical information.
  3. Eliminate the current or previous compensation question from all online application forms and consult with a legal expert to ensure these online application forms are fully complying with current legislation.
  4. Ensure that all of those involved in the interview process receive continual training regarding the growth of the law across the country.
  5. Recognize the importance of not only offering a competitive salary range but also objectively setting criteria defining the factors that will drive a higher or lower compensation package.

Questions and details will be ironed out as the legislation matures, such as can a Florida recruiting firm like Kirby Partners (where the law is not currently in place) ask a candidate who lives in an area where the law is in effect (e.g. New York City) their compensation history for a position in a state where the law has not been enacted? (Generally, the current laws appear to allow firms to rely on salary information if the job candidate volunteers it.)

Regardless of the direction the legislation ultimately takes, we’re hoping that the new requirements will accomplish their intended goals of narrowing wage gaps between different segments of the workforce.

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