Over the past five years, there has been a growing trend to implement salary history bans. These laws are aimed at ending the cycle of pay inequity experienced by women, minorities, and other underrepresented groups. Workers who have experienced pay discrimination will continue to do so in potential jobs if the salary offered is based on previous earnings, thus continuing the cycle of discrimination.
Determining compensation for a position is best based on market rate analysis, not what a potential employee has earned in the past. The job requirements may not have been equal, they may have worked for a smaller company, or they may have gained significant experience.
The salary history field is slowly being eliminated from job applications and should not be asked during interviews. This also may apply to past benefits and other compensation such as bonuses.
Where the US Stands on the Ban
More than half of the states have enacted legislation, yet bans vary widely among states, so if you’re unsure, check with your state laws and know that it’s better to err on the side of caution.
Here’s the current status:
- Currently, 27 states, the District of Columbia, Puerto Rico, and many localities have enacted these bans, and similar legislation is pending elsewhere within the US.
- Two states (Michigan and Wisconsin) have prohibited salary history bans. In these states, local governments may not regulate the information that employers must request, require, or exclude on an application for employment or during the interview process.
- Salary history ban legislation varies widely. Variations may include any or all of the following:
Prohibit employers from asking job candidates about their previous salaries. Some laws also prohibit asking about benefits or other compensation elements.
- Prohibit employers from using that information to set pay even if they discover it inadvertently (although some laws permit confirming pay information after offer is extended).
- Prohibit employers from taking disciplinary actions against workers who, either in person or online, share compensation information.
- Bar employers from disclosing a current or former employee’s salary information without their consent.
- Require employers to provide the pay scale for the positions for which they are hiring.
- Require reporting and support the visibility and free-flow of compensation levels among employees.
- While these laws were primarily written to focus on full-time hires (FTEs), most pay ban legislation is also applicable to contingent workers. Seek assistance in staying current with state and local pay ban legislations.
- Develop clear job descriptions for each position, then utilize third-party sources to conduct market rate analyses by job title and location.
- Clearly identify and inventory and factors that justify pay differences when pay gaps are apparent.
- Conduct regular audits of compensation rates, benefits, regulations, and job descriptions.
- Recognize and accept that workers, especially Millennials and Gen Z workers, share the details of their compensation. In a recent survey conducted by Bankrate, more than 40% of these workers have shared salary information with a coworker, as compared to 19% of baby boomers