A growing number of states and localities have implemented laws which ban employers from asking about salary history during the hiring process. Some of these state laws require the organization to disclose the pay range for the positions before compensation can be discussed. One purpose of these laws is to limit and/or correct the gender pay gap.
Inquiring about an applicant’s salary history has been a common practice for many employers. The information is sometimes used to determine if an applicant’s previous pay is “in line” with the pay for the current job. Employers have also used past salary as a component in determining the starting salary. The problem is that this can perpetuate the pay disparity between men and women.
Consider the scenario of a female employee who has been underpaid for performing the same job as a male employee. If the female applies for a job with a new company, and salary is used as a basis to establish the starting salary at a new job, the female continues to be underpaid and the pay disparity continues.
Under the federal Equal Pay Act, men and women must be given equal pay for substantially equal work in the same establishment. These new state and local laws which prevent inquiries about salary history are taking further steps towards pay equity.
What Your Organization Should Do Now:
· Make sure you are aware of state/local laws pertaining to inquiring about salary history during the hiring process. DCSI can assist you with these regulations, especially if you have remote positions where employees can be located in different states.
· Establish a salary range for each position in your organization. Ranges should be based on the education, work experience, and skill set for the job, along with what the position pays in the market and the criticality of the position in your organization. By paying new hires based on established salary ranges, you can ensure internal equity across all employees and prevent possible pay discrimination. Our Compensation Consultants can work with your management team on analysis and market pricing.
· Even if it is permissible under your state law, consider removing salary history questions from your Application for Employment and from the hiring process. Also, make sure that your hiring managers are following the right process to avoid any legal consequences. DCSI’s training team can get your managers and recruiters up to speed on regulations and best-practices.
DCSI is available to assist with establishing salary ranges and modifying hiring practices. If you need assistance with a Human Resources audit or have questions on this topic, please contact us Mon-Fri 904-278-5383.
