STOP Asking Candidates about Current Salary

By Valentine HR Partners on May 17, 2018 • ( 0 )

The following states have now passed some sort of equal pay legislation that either prohibits any questions about current or prior salary before an offer of employment or requires that the company not consider current or prior salary in make a salary offer to a candidate.

The states are: CA, DE, MA, NJ, NY, and OR.

The cities that have passed such legislation are:
Philadelphia, New York City, and San Francisco.

Finally, we can’t forget Albany County in New York as many counties are now jumping on the bandwagon and passing their own legislation regarding discrimination, sick leave, equal pay, etc.

In addition to banning interview questions about current or prior salary, most legislation requires that all such salary inquiries be removed from any Application form.

Some legislation provides the classic “look but don’t touch” approach by allowing a company to ask about current salary but require that the business not use that information in the process of setting the salary for the new employee, which really doesn’t make any sense. Why would you ask about current salary and then, not use it as a factor in setting the new salary.

All of this legislation is designed to narrow the gender salary gap between women and men and in some cases the minority salary gap.

Most laws do not go so far as to require companies to disclose pay grades or pay scales, but it wouldn’t be a surprise to see future legislation requiring such disclosures as does the current law in California (CA).

In CA if an applicant makes a request to see the pay scale for a position, the company is obligated to provide it and when something starts in CA, it’s only a matter of time until it moves east. As such, CA is providing the first “shot across the bow” to companies that they had better create some logical methodology for establishing pay grades, other than “sticking their fingers in the wind.”

Each of these laws allows employees to talk among themselves about their salaries and prohibits companies from retaliating against employees for such discussions. Section 7 of the National Labor Relations Act (NLRA) already provides this protection for employees who are eligible to join a union. But these new pay equity laws cover all employees, which extends this protection to supervisors and managers who were not protected by the NLRA.

Companies that are not in the cities and states listed above cannot afford to breathe a sigh of relief,
especially if they are in 9th Circuit’s jurisdiction, which includes AZ, AK, CA, ID, HI, MT, NV, OR, and WA.

The 9th Circuit in April 2018 reaffirmed the federal Equal Pay Act (EPA) in what many are considering a sea change for the way organizations nationwide are to set salaries for new employees. It is this decision that experts are using to tell companies throughout the U.S., not just the 9th Circuit, to stop asking applicants about current or past compensation.

The decision by the 9th Circuit noted that if by chance a company uses a female applicants current salary in establishing an offer of employment, the organization can be accused under the federal EPA of perpetuating a discriminatory system, even though the business had nothing to do with the person’s prior rate of compensation.

Finally, the laws prohibit discrimination on the basis of gender or any protected category in the payment of wages for comparable work, unless the variation in compensation is based upon:
**Seniority,
**A bona fide merit system,
**Geographic location,
**A bona fide system which measures earnings by quantity or quality of produc tion or sales, or
**Education, training, or experience to the extent such factors are reasonably related to the particular job in question and consistent with business necessity

This issue of comparable work is the reason that many companies throughout the U.S. are formalizing their pay structures in an effort to be able to defend any legal challenges to wage discrimination.

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