The way organizations recruit, interview, and choose new employees is changing in a variety of ways. What were once commonplace practices are now being phased out in favor of new processes that are less discriminatory and equal for everyone.
One such practice under the microscope in today's hiring climate is asking about salary history. This question has always been an accepted staple on applications and in job interviews. This is changing in many parts of the United States. New York, Oregon, and California have already put regulations on, or completely banned, asking about salary history. Vermont is following their lead. According to a recent article by SHRM, salary history bans may re-shape pay negotiations.
Per HB 294, Vermont has enacted a prohibition on an employer seeking and using past salary history. The law is effective on July 1, 2018. It will be certified at 21 V.S.A. §495m.
An Employer May Not:
- Inquire or seek information regarding an applicant's current or past compensation.
- Require that past compensation levels meet certain criteria.
- Determine to interview an applicant based on past compensation.
- Asking applicants about their salary/benefit expectations.
- Providing applicants with information on employer's salary and benefits.
- Verifying salary after an offer of employment is made, if an applicant voluntarily provides past salary information.
The Employment Law Applies to:
- fringe benefits
- equity-based compensation
The logic behind banning the salary history question is to assist every person, regardless of age, race, or sex, in getting paid the same compensation for the same position. Even today, certain population segments struggle with pay inequality. For example, women typically only make 80.5 cents for every dollar made by a man, according to a 2016 study by Institute for Women's Policy Research.
Vermont most likely won't be the last state to enact a salary history ban during the background screening process. Similar employment laws are expected to pass in other cities and states that regulate companies asking about and using previous compensation in their negotiations and decisions of hiring new employees.