Compliance Corner: Q&A on Salary History Bans

Some employers use salary history as a way to set or negotiate compensation, but this tactic can have unintended consequences - including causing salary inequities and gaps. Salary history bans are one way to attempt to close those gaps. But for states and localities that don’t have any salary ban laws, there are ways for HR professionals to encourage managers and employees to stray from asking for salary history and offer new hires a fair salary.

In this month’s Compliance Corner blog, we're answering questions about the significance of salary history bans, how salary history bans can help to close the wage gap and the benefits for all potential employees.*

1. What are salary history bans?

Salary history bans are policies that limit or forbid employers from asking job candidates about their previous salaries. These bans prohibit employers from obtaining this information from candidates to be used in making hiring and compensation decisions. Without this information, employers can make a fairer job offer, based on the candidate's demonstrated skills and experience.

As of this year, 21 states have state-wide salary history bans in place, some of which are applicable to public or private employers only, as well as 21 different localities.

2. How do salary history bans relate to pay equity and who benefits from them?

Historically, women and minorities often earn lower wages for performing the same work as their counterparts. While these inequities have narrowed somewhat over time, there is still a sizeable disparity. Setting pay based on a candidate’s prior salary is a decision that can affect subsequent raises, bonuses and promotions. It preserves the status quo regarding the current state of pay inequities for those candidates in the workforce.

Salary history bans target those pay inequities by promoting equal pay for equal work, regardless of a candidate’s gender, age, or race and should be a key piece of a comprehensive equal pay effort of the company.

3. How do salary history ban laws differ from state to state?

Since salary history bans are at the state level, the way they’ve been implemented varies quite a bit. For example, in California, an employer must supply the salary range to a candidate if the candidate asks during an interview. In Colorado, employers must disclose salary ranges in the job posting.

Some of the other ways these laws can differ is in the timing of asking for salary history. In some states, the employer can never ask. In others, the employer can ask after a conditional offer has been made.

4. What if the candidate discloses the information without being asked

In some states with salary history bans, the employer would be allowed to consider the salary when making an offer; in others the employer would not, even if it is disclosed by the employee without being asked.

For most states, salary history bans are part of larger equal pay laws, so it’s worth it to ask an HR professional or an employment attorney how these laws might interact with other equal pay requirements.

5. How can your company comply with salary history bans?

Remember that each manager is considered a representative of the company. Provide training to hiring managers and recruiters to ensure that they understand the state laws.

For companies with newer managers, a helpful option may be to develop an HR-approved list of interview questions that managers can use. This helps to ensure that managers are staying compliant during the interview process.

Review job applications for any questions about salary history. Train recruiters to coach candidates not to share current or previous salary when they are asked about desired salary.

Consider whether the company wants to ask for salary history after a conditional offer is made, or during the background check process. If so, is the information needed at that point? These are business philosophies that HR reps should feel confident sharing with any candidate who asks.

6. If salary history bans are not in place in your state, what can hiring employers do to try to achieve pay equity?

Remember that labor laws are a floor and not a ceiling. Employers can always be more proactive to achieve fairness above and beyond state laws.

Salary history questions can still be taken out of job applications and interview questions. Managers can be trained on the reasons for and importance of avoiding salary history during hiring and its impact on women and minorities.

Other ways to achieve pay equity include creating salary bands and running pay equity reports at least once a year to ensure that no groups are negatively impacted by the company’s pay practices.

*This blog is not legal advice. Please seek proper legal advice.