Heads Up when Hiring – Salary History is Moving Off the Table
If asking candidates about their salary history is still part of your recruiting, application, or interviewing process—it is time to rethink the question.
Despite better awareness of the issue, there remains a significant wage gap between men and women in the US. According to the National Women’s Law Center (NWLC), women earn about 80 cents for every dollar paid to men in equivalent roles. But it gets worse:
- Working full-time, black women make about 63 cents on the dollar paid to white male employees doing similar work. For Latina’s, it is 54 cents on the dollar.
- Working mothers receive less pay than working fathers, and single women suffer the same disparity.
- Older women, working full time, see the gap grow as they age.
- Overall? Women on average would need to work ten years longer to make up for the “lifetime wage gap” between males and females.
In a workplace where employers strive to be seen as fair, the level of wage discrimination in this country is shocking. At any age, equally-qualified women can expect to be hired less often and paid less than males with the same background and qualifications.
The collection of salary history information during the application and recruiting process is one of several factors responsible for the sustained wage disparity between men and women.
For employers, salary history information quickly provides a context in which to frame salary discussions. While salary history can be obtained from the applicant, it is also available through agencies like Equifax. The information makes it easier for employers to negotiate salary and gives them background on what their competitors are paying for talent.
Because female workers are historically paid less, the tendency toward underpayment carries forward, potentially skewing career earnings. Studies suggest women are less likely to negotiate briskly for higher earnings during hiring and less likely to revisit the issue with any regularity during their tenure with an employer.
With a salary history in hand, potential employers can adjust a salary offer lower for any applicant—quietly saving their hiring budget at the expense of an applicant who accepts the offer without knowing the true salary range offered by the company.
The times are a-changin’
Legislators across the country are starting to take notice. California, Puerto Rico, Delaware, and Oregon have initiated bans on asking salary history information. Massachusetts was the first state to require employers to make wage offers based on what the company pays, rather than the salary history of a candidate.
Employers critical of the measure believe the trend will increase hiring costs, not only in salary but in the surveys and research needed to develop a salary picture based on the market, not an individual salary history.
On a state-by-state basis, it is unclear what restrictions or guidance may develop around employer use and procurement of applicant background data gathered from vendors, not the candidate. It is possible this type of Big Data could be seen as violating the spirit of any existing legislation or could be used as a claim for salary bias if the candidate becomes aware of the disclosure.
In a related effort to push back on an August, 2017, federal action, the NWLC recently filed a lawsuit against the Office of Management and Budget (OMB), the Equal Employment Opportunity Commission (EEOC), and other federal officials after the Trump Administration rolled back requirements that the EEOC collect wage data to enforce pay transparency efforts.
The gender wage gap is not closing anytime soon. In the meantime, a closer look at pay disparities, and adjustment of recruiting practices to provide fair disclosure of salary levels to potential candidates could increase the value proposition of any enterprise competing for talent in a too-tight candidate marketplace.