An increasing number of cities and states have banned or will ban employers from asking candidates about their compensation and salary history. What started off as an anomaly in just a few areas has now picked up speed and is poised to change the landscape of hiring. While this may seem like it makes life much more difficult for recruiters and employers—especially if you operate in multiple states—it may actually unlock a better way of thinking about candidates. With seventeen states so far with salary history bans on the books already or going into effect on January 1, 2020, it’s clear that the times they are a-changing.
Just because your state hasn’t passed a ban yet doesn’t mean it won’t soon. This growing trend may soon become a nationwide phenomenon if these numbers are to be believed. With this in mind, it’s time for recruiters and employers to get ready to change gears and learn how to have conversations about compensation a little differently.
Here’s an overview of what’s going on with the salary history bans and how you can use this to your advantage as an employer:
What is covered under the salary history ban?
It’s pretty simple: Under the salary history ban currently in effect in seventeen states and ever more cities, you cannot seek, require, or request a candidate’s salary history. Gone are the days of inquiring what an applicant made at a previous place of employment and basing their new salary on that number. If they volunteer that information, that’s on them, but you absolutely cannot ask for that information, or you will risk legal action. Some instances of this ban go even further and prohibit employers from basing compensation on a candidate’s salary history even if that information is volunteered by the candidate.
It’s important for employers to know what is covered and what isn’t in their state, in order to stay on the right side of the law. Failure to comply could result in a legal action that neither you nor your business can afford. For a full list of what you can and cannot ask a candidate in your state, check out HR Dive’s database.
Where is asking about salary history banned?
Currently, seventeen states have passed bans that have either already gone into effect or will go into effect in the next twelve months. States on this list include California, Colorado, Hawaii, New York, and many more. Some, like Alabama, have simply issued a protection for candidates, making it illegal to discriminate against a candidate who chooses not to disclose this information. In addition to statewide regulations, many cities and counties have passed their own laws regulating this exchange of information even further. For instance, San Francisco takes things a step further and additionally prohibits employers disclosing an employee’s salary information without consent.
Fun fact: Some states have passed the opposite regulation, in fact prohibiting salary history bans in that area. In Michigan, for example, it is illegal for any local government to regulate the information that employers request for employment. How’s that for going counterculture?
Why was asking about salary history banned?
The alleged goal with these salary history bans is to help reduce the risk of wage inequality for women and minorities. Since these demographics may start their careers unfairly being paid less in many instances, this move to ban the disclosure of salary history makes it easier to ensure that every candidate is offered what they are worth right now, without allowing a previous role’s inequality to be carried forward into each new role.
Under these new laws, each role is essentially a fresh start for a candidate. Now, a salary will be based entirely on experience, the company’s budget, and the demands of the role—as it always ought to have been. No employer will be able to justify a lower rate based on a candidate’s past roles.
How do I negotiate now?
And now, it’s time for the million-dollar question… How, you might ask, do I negotiate without asking about a candidate’s compensation history? You may be concerned about overpaying a candidate without this information—but think first about all the information you do have access to. You have access to their experience, skills, education, and employment history. You know what the market says the salary range is for someone in that role. If you’re discussing salary, you’ve likely met them, and learned about their personality and how well it might mesh with your company’s culture and goals. Put together, that’s more than enough information to make a highly informed decision about how much to offer your ideal candidate.
While this new salary history ban may make negotiations a little more difficult on the surface, around here we like to think of this as expanding our opportunities to get to know what our candidates are really worth—and paying them appropriately. If you’re ready to work with a world-class recruiter who understands your needs, contact GRN Mid-Cities today. With our extensive network and years of experience in multiple industries, if you have a role to fill, we may already have just the candidate you need.