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May 29, 2020

HR's Gameplan for Handling the Salary History Question

New regulations-1

“What's your current income?”

For decades, employers asked job seekers this question without hesitation. A candidate’s income was considered an open book that HR and hiring managers felt privy to without compunction. Salary information could be used to figure out the type of compensation package an applicant would accept, and even what they were worth.

Hiring managers could reach certain conclusions from a job seeker’s salary history. If it was too high, employers might decide to pass over offering the person the job because they were “too expensive”. If it was too low, the applicant could be perceived as not qualified enough or further along in their career path to handle the expectations of the position they were seeking.

All this is evolving, and HR must be ready.

What happened?

Once a staple of the interviewing and hiring process, the salary history question has recently come under fire for a big reason: Pay disparity. If, for example, a woman and man are vying for the same position, but the woman is making $50,000 a year and the man is making $58,000 a year, the woman’s offer may be lower than the man’s. The philosophy here is that the salary history question keeps the gender income gap (in 2019 it was estimated that a woman makes 79 cents to a man’s dollar) from narrowing. Without the question, both parties will be offered the same salary which, over time, helps close the gender pay gap.

Since a position’s salary is open to negotiation, there are usually no hard-and-fast numbers that employers don’t budge from. The salary history question typically sets the starting point higher for men than it does for women.

Bans and Such

To address this issue, 17 states and 20 local bans (as of February 2020) were passed to eliminate the use of the salary history question with regard to employment decisions. These differ slightly. For example, some states allow employers to ask about salary history but cannot discriminate against the candidate if they decide not to divulge the history. Other states have banned the question entirely AND the use of it (even if the applicant volunteers it) to make hiring decisions. If employers hire in these states, cities, and parishes, they must adhere to the rules of that area. Can this be confusing? Absolutely!

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What should companies do?

Whether your company operates and hires in geographical areas where there’s a ban on asking about salary, or your organization is simply taking steps to reduce pay disparity, reviewing how you’re using the salary history question is a smart move. Employers can address the salary history question ban while still maintaining successful hiring practices in several ways.

Train! Train! TRAIN Your People

The first action is to address your hiring team and make certain they understand what is and is not acceptable and/or legal. Explain why the salary history question is no longer part of the interviewing and hiring process and answer their questions. Help them replace the inquiry with other questions that will give them an understanding of the applicant without overstepping.

Document your policy on the salary history question in all training material and your employee handbook.

Set A Salary Range

Instead of basing a job offer on what a job candidate currently pulls down, set up a pay range for every position in your company. This is a fair approach and helps everyone who does similar jobs be paid similar wages. In addition, if a person is qualified for the job, he or she won’t be low-balled because they have been underpaid in the past. Over time, these processes will even out the playing field.

Follow Industry and Location Salary Guidelines

Compensate your employees fairly and without discrimination by staying competitive and relevant to your company’s geographic location and industry. Use online industry sources to research the income that every position you hire for should be compensated. Benchmarking off geographic averages helps you document how pay is determined for everyone and keeps employees who do the same work from dealing with wide income discrepancies. This makes the salary history question less important to your process.

Use Other Ways to Determine A Candidate’s Hireability (yes, we made that word up)

While the size of a job applicant’s salary was previously looked upon as a way to gauge a person’s worthiness to be hired, there are other, better ways to determine that. Assessment testing is a powerful tool to learn about a candidate’s attitudes and behaviors about work, for example. In-depth interview questions and mock job projects are other ways to gather concrete information on the job seeker and their potential fit within your organization. Finally, employment verifications and reference checks can assist in gaining background information on job candidates’ abilities and skills.

With several states and cities banning the salary history question, and more in the process of doing so, it’s essential for employers to look at alternate ways to interview and hire their job candidates. They should also review the way salaries are determined and streamline them based on uniform information. Over time, these efforts will close the gender pay gap and every worker will be paid fairly for their positions.

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