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More Employers Ditching Pay History Question

A growing number of companies have adopted a policy of not inquiring what recruits were paid in their prior jobs. The goal is to shrink the pay disparity and remove other hurdles that hinder work opportunities for women and people of color.

New York City, Delaware and California recently passed laws banning employers from asking prospective job recruits about their compensation history before putting forth a salary offer. So The New York Times reports.

Proponents hope that preventing such inquiries will give prospects a better shot at being offered a salary that is not based on their prior job where they may have been paid less than their worth.

"It seems like the general social impulse is 'We don't like employers using particular information, so we'll tell them they can't use it any more and assume that's the end of the conversation," says Jennifer Doleac, an economist at the University of Virginia.

But Doleac also warns that these laws may not necessarily have the intended effect with some employers, noting that "if they cared enough about it to ask it to begin with, they probably care about it enough to try to guess."

Doleac cited studies, including one she wrote (PDF), that found employers have already used ways to evade state and city laws that prohibit a different question in which employers ask recruits about criminal records in the early stages of the application process.

Doleac's study notes that employers assumed that young black and Latino men were more likely to have criminal records and hired fewer of these candidates once the laws were in effect. But advocates contend that banning salary-history questions could help reduce pay disparities.

"In companies that are treating people the same, and not thinking about how their behavior might differentially harm people, this type of law raises awareness of it," says Joelle Emerson, founder and chief executive of Paradigm, a firm that advises employers about diversity. "It forces companies to sit down and say: 'O.K., why were we doing this before? How should we set compensation now that we don't do it this way?"

New York-based Dime Community Bank got rid of its salary history question after the city passed its law in October. The bank has about 400 employees at 29 branches.

Angela Blum-Finlay, head of human resources at the bank, had already been deemphasizing salary history even before the law took effect and also asked hiring managers to use competitive benchmarks when interviewing for different positions. It makes little sense for the bank to focus on offering as little compensation as possible to woo recruits especially when the supply for labor is tight, she notes.

"We are, at Dime, trying to be an employer of choice, a place people want to come," she says. "If I lowball you coming in, I'm not going to make you feel valued."

Insurance company Progressive noted in February that it would no longer ask job recruits about their previous salary, according to a release from the firm.

"We've always based our pay on market research," says Lori Niederst, the firm's chief human resources officer. "We hope this change will give candidates who apply for our jobs confidence that they will be paid on what they bring to Progressive, regardless of whether their previous employers paid them fairly."

In January, Amazon decided to prohibit its hiring managers from asking U.S. job prospects about previous salary, BuzzFeed News reports. The California law had banned Google, Facebook and Cisco from asking their recruitment prospects the question as of Jan. 1, Fortune reports. These employers also have done the same in their locations outside California.

Some companies, including Amazon, find it makes sense to have the same standards apply to their respective human resources policies in all locations. For Amazon, those policies impact 500,000 workers.

Also in January, New Jersey Gov. Phil Murphy signed an executive order prohibiting state agencies from asking the question. It took effect Feb. 1. Gov. Murphy notes in a statement that the executive order is "the first meaningful step towards gender equity and fighting the gender pay gap."

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