The long-standing practice of asking interviewees what they previously made no longer will be allowed as of July 2018, with the goal of narrowing the gender wage gap, the National Law Review reports.
The new law, a first in the country, will also prohibit firms from seeking out the applicant’s former employer to learn salary information. It expands the definition of “equal work” and does not allow employers to silence their employees from talking about salary.
“The hope is that by taking the salary history question off the table, employers will rely only on relevant factors and won’t even unconsciously rely upon an irrelevant factor, such as the employee’s prior salary,” says Mickey Neuhauser, attorney with from Epstein Becker Green in Newark, NJ.
The new law won’t prevent applicants from talking about their salary or from keeping both parties from negotiating the salary, she added. And if employers and employees shake hands on an agreement that ends up shortchanging the employee in the wages area, watch out.
The law “does not protect employers from paying a salary lower than what would otherwise be permitted under the Act simply because an individual has agreed to accept that salary,” Neuhauser says. “In other words, an employee cannot agree to be illegally underpaid.”
Under the new law, job candidates will no longer be disadvantaged by employers who can unfairly use past salary history as a barometer of what to offer, noted Alison Green in a recent article from the U.S. News & World Report. She is also the author of “How to Get a Job: Secrets of a Hiring Manager.”
The law is intended to stop the cycle of pay inequality where women applicants have historically been offered lower pay than male applicants, says Amanda Marie Baer, an employment lawyer at Mirick, O’Connell, DeMallie & Lougee, in Massachusetts.
“For example, if a company is hiring two accountants, Pam and Paul, and knows their respective salary histories, it may be inclined to offer Pam $80,000 because she was paid $60,000 by her last employer, while offering Paul $90,000 because he was paid $70,000 by his last employer--resulting in a $10,000 pay gap,” Baer noted. “If the company does not know Pam and Paul’s salary histories, it may offer an equal salary of $85,000 to both.”
Recruiters find that knowing the salary history and what the candidate expects will help HR to be in the best position to negotiate what is best for both the candidate and employer, according to a Society For Human Resources Management article. “It’s a waste of time to put the candidate through the process and get to the end, only to realize there is no way we can accommodate their requirements,” says Erin Stevens, a corporate recruiter with Jasper, Indiana-based MasterBrands Cabinets.
She asks about salary history and what the candidate expects on the initial phone call. Employers say knowing salary history helps them gauge how much job candidates’ past bosses have valued their work, Green of U.S News & World Report noted. But she wrote that potential employers should do their own homework to learn what candidates can bring to their firm. That can be based on a candidate’s experience, accomplishments, skills and work history.
“Plenty of companies don’t request salary history and still manage to figure out what a job or a new hire is worth to them,” Green wrote. “In fact, a company that doesn’t know what a position is worth is a company that hasn’t done sufficient planning and analysis before advertising a job opening.”
For job candidates in the 49 other states who are asked about their salary history, Green suggests candidates respond by offering the employer the salary range they are looking for with the new job instead of a specific number. If the interviewer persists, the candidate can say they prefer not to share what they consider private information. If a candidate fears not answering the question will doom his or her chances, he or she can offer a more nuanced response, especially if he or she thinks the employer will use the information to “lowball you at the offer stage,” Green wrote. “For example, you might note that your most current salary is under-market and is the primary reason that you're looking at other organizations and that you wouldn't consider changing jobs for less than a certain salary amount,” she noted.
While no other states have passed a similar law to Massachusetts, states like California, Maryland and New York have created punitive measures in the last two years for employers who compensate employees differently based on gender, Corporate Counsel reports. But, New York may soon follow Massachusetts’ lead.
In August, Letitia James, the public advocate for New York City, introduced legislation that would also ban salary history questions during interviews, according to a recent article from Fortune.
A study by James’ office released earlier this year found that women in New York City make $5.8 billion less every year than their male counterparts, or nearly $6,800 less in annual median income. But, if every state adopted the same law as Massachusetts, the gender gap would not likely go away because the root causes are too complex for such laws to address, according to the Fortune story.
“There’s no doubt that basing starting salaries, and subsequent raises on past pay does perpetuate the wage gap,” says Benjamin Frost, global head of pay data at Korn Ferry. But, the disparity is more prevalent from “hidden biases that are baked in to the policies and structure of many organizations. So much of how companies operate hasn’t really changed since the 1950s when the world was a very different place.”
A recent study by Frost’s firm showed the wage gap is non-existent for men and women in senior executive/C-suite positions.
The problem is very few women reach these top levels and many more women in the middle leadership positions are more likely to remain there longer than their male peers. And men are often rewarded with promotions to the higher executive levels by, for instance, raising their hands and getting noticed, whereas many women don’t do this, Frost said.
“We need to rethink the whole pipeline of talent in companies,” he said. That should entail “taking a more analytical approach to what success looks like, and exactly what skills are needed, for any given job and salary level--regardless of gender, race, or anything else.”