There you are, in an interview with a great candidate. Everything’s going well, and you’ve got just one more box to tick before wrapping up. You go in for the big question:
"So, how much do you make in your current role?"
And just like that, you’ve broken a brand new law in several cities, states, and territories.
What’s illegal and what’s not? Here’s what you need to know
As part of a growing trend, several cities, states, and territories across the United States have passed (or are in the process of passing) laws that make it illegal for employers to ask about salary history.
What’s remarkable is just how quickly these laws have spread. The first bans took effect in 2017, creating a domino effect that’s moving across the nation. According to Bloomberg Law, so far this year at least 23 more states are considering similar legislation.
It’s all part of an effort to eliminate the wage gap between men and women. The thinking goes that when employers ask about salary history, it reinforces existing inequalities and causes them to widen over time.
As I write this, here are the states, territories, and cities that have passed salary history laws:
- Puerto Rico
- Massachusetts (law goes into effect July 2018)
- New York City
- San Francisco (law goes into effect July 2018)
- New Orleans
The law varies from state to state, of course, so be sure to check exactly how it applies to you. In some places, like Pittsburgh and New Orleans, it only affects public employers. In others, it impacts everyone.
Even if the pay history question isn’t yet illegal in your part of the country, I think it’s wise to be prepared and adjust your hiring practices accordingly.
And yes, that’s going to be a big adjustment for most of us: according to a Korn Ferry survey from November, 95% of all large and mid-sized companies ask for pay histories.
Time for a change? You bet. Because when these laws finally reach you (and there’s a good chance they will), you don’t want to be the one who missed the memo and landed a discrimination lawsuit you just won’t win.
What you need to start doing
So how do you stay on the right side of the law?
First, budget based on the role you’re hiring for, not the person you’re hiring. Do the background research to figure out what the right salary range is for this level and skill set.
Next, change the way you talk about salary.
One way to do this is to let candidates self-select out of the position if it doesn’t match their expectations. You can say, “We’re budgeting between $60,000 and $70,000 for this role, depending on skills and experience. Are you interested?” If they’re not, they’ll say so, and you’ll move on.
You can also ask candidates for their salary expectations (note that I didn’t say salary history). Ask them to walk you through their thinking, and how they got to that number. Just know that they may base their answer on previous earnings, so you have to tread carefully here and make it clear that you’re not looking for where they were, but where they expect to be.
And remember that while candidates can volunteer their pay history, you still can't base their salary offer on previous earnings. Instead, be transparent about your budget for that position.
If you’ve committed to paying for the position, not the person, you won’t put yourself at risk, and you can have an open conversation about whether the candidate’s salary expectations—and what you’ve allocated for that position—match up.
Finally, review any application forms you ask candidates to fill out. You don’t want to land in legal trouble just because someone forgot to update the form you’ve been using since you hired your first employee!
These new laws may not have swept through your city or state yet, but I think it's only a matter of time before they do. My advice? Let’s all get in front of this trend before it catches us off-guard and bites us where it really hurts—in court.