Salary History: What You Can and Can't Ask

The reason for prohibiting questions about a candidate's salary history is clear: closing the gender pay gap. What's less clear? How evolving legislation will impact your hiring process. Here's how to stay compliant -- and still find out what you need to know:

In 2016, Massachusetts became the first state to ban employers from asking job candidates about their salary histories. Since then, several other states have considered or passed similar legislation. Several major cities have prohibited salary history questions as well -- including New York City.

Here, we explore why state and local governments are jumping on the salary history bandwagon and offer tips on how to interview, research, and negotiate salaries in changing times.

Why Salary History Legislation is Gaining Momentum

States and cities considering (or already embracing) salary question bans are doing so for one primary reason: They're seeking to close the gender pay gap.

Despite considerable gains over the past 50 years, women working the same jobs and hours as men earn 76 percent or less of what their male counterparts earn. One way this gap perpetuates itself is through questions about salary history. A female candidate starts out making less than male co-workers; she reports this amount when asked in an interview; she continues to make less because her pay at the new job is scaled to her too-low pay at the previous job.

And while any candidate is free to choose not to answer questions about their past salary, research indicates that refusing to answer has a negative impact on women but a positive one on men. A 2016 PayScale study of over 15,000 candidates found that when a woman refuses to talk about her salary history, her offer goes down about 1.8 percent -- but when a man refuses to talk, his offer goes up by about 1.2 percent.

The data indicate that women face a tougher fight for fair pay either way. In the face of these facts, legislators throughout the country are stepping in. Laws are changing fast, and it's up to employers to determine how to respond.

How to Interview on the Right Side of the Law (and Still Find Out What a Candidate Wants)

Employers facing salary history question bans also face a dilemma. Understanding a candidate's salary expectations is a key part of many companies' offer-generating processes. Take a "shot in the dark," and you may end up offering a candidate a salary that's too low or too high.

How should employers respond? Consider these tips:

    Think future, not past. Bans on asking about salary history typically don't prevent employers from asking about salary expectations, or what the worker would like to earn at the new job.

    Check for questions you can ask. For example, New York City's law allows employers to ask about "objective measures" of productivity, such as bonuses or commissions, which can help employers evaluate candidates in sales and similar jobs. Likewise, questions about the benefits a candidate has been receiving at current or past jobs can help you build a clearer picture of the candidate's total compensation expectations.

    Know your ranges for a given position. Set compensation ranges for each position based on its current value in the market and its value to the organization. Then, evaluate where to place each candidate within that range based on their skills and experience, rather than on their past or present salary.

Finally, remember that while you may not be able to ask: "What are you making at your current job?", candidates can still tell you -- and often will. The law may prohibit the question, but it doesn't prohibit a discussion the candidate initiates by volunteering their salary history.

Where to Go for Help

For guidance on how to comply with changing laws, speak to an attorney. Your lawyer can answer specific questions you have about how your interview questions and your company's hiring process may be affected by the new law.

For help crafting solid offers, talk to your recruiting partner. Staffing firms regularly collect data on salaries in the industries they serve. Your staffing partner can provide information to help you ensure your compensation offers are competitive. You can also work with your recruiter to create and negotiate specific offers.

This article is intended to serve as a general guide only and does not provide legal advice. If you need legal advice, speak to an attorney who is licensed to practice law in your area.