Asking for a salary history may seem like a harmless and even practical question. However, this can lead to pay discrimination, making it impossible to earn what you`re worth, as your salary is usually based on your last salary. The city is not allowed to ask applicants for their salary history until they have been hired at an agreed salary. Government agencies cannot request information about the salary history of job applicants and cannot rely on salary information previously received to determine compensation. One of the objectives of the ban on pay history is to close the gender pay gap. Women often earn less than men in their careers because they are paid based on their previous salaries, which tend to be lower than those of men. This cycle continues throughout women`s careers, so women generally earn less than men, and it begins during the hiring process. One way for employers to get around these legal hurdles is to educate you about your salary expectations and force you to indicate your salary range. If you have a history of unfairly low wages, it can be hard to know what to ask. Companies can take one simple and immediate step to significantly reduce the wage gap between black and female employees: stop asking candidates for previous salaries. Over the past three years, 14 states have enacted wage history bans, and the authors note that these new laws have resulted in significant wage increases for black (+13%) and female (+8%) candidates taking new jobs. Instead of asking for salary histories, companies can ask which candidates hope to earn salary scales or post in job postings, which is becoming increasingly common.
The authors` analysis, based on states that have prohibited employers from using salary histories, shows that employers can hire just as effectively without using salary history — turnover rates, for example, have not increased in states where bans are prohibited. At the same time, employers who avoided asking for a wage history were able to significantly reduce unfair wage gaps. The employer with 15 or more employees must, at the request of the candidate and after making an offer, provide information on the minimum wage for the position for which the candidate is applying. Yes. However, employers may only request information on salary history if required by applicable federal, state, or local law on January 6, 2020, when section 194-a of the Labor Code takes effect. Asking for the salary history of job applicants has been a fairly common practice for employers over the years. Recruiters and hiring managers often use this knowledge to exclude people from the candidate pool, either because the candidate is “too expensive” or because their previous salary is so low that hiring managers consider the person low-skilled or inexperienced. Companies have also used previous salary information to calculate compensation for new hires – a process that can maintain the gender pay gap. To address this inequality, several states and municipalities have prohibited requesting prior salary information, although laws vary in duration, scope, and applicability. Another concern is that salary history could reveal the quality of the candidate in general, outside of their career trajectory. The problem is that without this information, employers on average select lower-quality candidates, resulting in lower job matches and higher turnover.
Our data shows that this does not appear to be a major problem. Turnover rates have not increased in states where wage history is generally prohibited, or among workers who were relatively underpaid in their previous jobs. In short, our analysis, based on states that have prohibited employers from using salary histories, shows that employers can hire just as effectively without using this information. At the same time, employers who avoided asking for a wage history were able to significantly reduce unfair wage gaps. An employer or employment agency cannot ask a candidate for their current or previous salary if it is illegal to do so. It has been shown that this information has been widely used to create such a large gender pay gap. Municipal offices, departments and other departments are not permitted to inquire about a candidate`s salary history, or refuse to hire candidates or otherwise retaliate against candidates if they refuse to disclose their salary history. The prohibitions in the Act do not apply to candidates for internal transfer, promotion or certain previously employed candidates. Illinois` governor said the state would no longer ask potential employees about salary history. There were arguments for and against the use of salary history information.
For example, companies and HR professionals have argued that knowing a candidate`s salary history is critical to saving both the candidate and the company time during the interview process. If the company could not afford the salary that the applicant would likely ask for – usually 10 to 20% more than the current salary – then there would be no point in making an offer that did not fall within that range. However, employers can – and increasingly do, as our data show – simply take a salary scale with a job offer and allow the candidate to choose for themselves whether this scale is acceptable to them if they decide to apply. No. Since 6 January 2020, Article 194-a of the Labour Code prohibits an employer from requesting (directly or indirectly) information on a candidate`s salary history, orally or in writing, in person or through a representative. This includes compensation and benefits. The law also prohibits an employer from relying on a candidate`s salary history to determine whether to interview or offer a job, or what salary to offer. Please note that additional protections may apply under local laws.
Yes. Employers cannot request salary history information from current employees in order for them to be interviewed or considered for promotion. However, employers may consider information they already have for current employees (i.e. the current salary of a current employee or benefits paid by that employer). For example, an employer can use an employee`s current salary to calculate a raise, but cannot ask that employee what the salary is for other jobs. AFL-CIO Connecticut President Sal Luciano recently told Connecticut lawmakers, “Using salary history to evaluate and compare job responsibilities and candidates` performance assumes that previous salaries are an accurate measure of a candidate`s experience and achievements, not the product of discrimination or gender bias.” Employers are not allowed to search for salary history.