Can employers ask a prospective employee what they have earned at prior jobs? For most employers, the answer is currently – yes.
But, if you are among the large group of employers that do ask about past earnings, take heed. A growing number of states and municipalities and even the federal legislature are considering new laws that would ban employers from asking candidates about their salary history. Last summer, Massachusetts became the first state in the country to pass such a law. The Massachusetts salary history ban is part of a broader state law promoting gender pay equality. Proponents of these salary history bans postulate that employers who base starting salaries on their candidates’ past salary rates may perpetuate the underpayment of women, who studies show make less on average than men doing comparable work. Accordingly, these groups believe that prohibiting employers from asking about salary history will help reduce the pay gap between men and women in the workforce. These bills are also seen as a way to level out pay gaps created by other disparate circumstances unrelated to the job. For example, people who graduate from school and begin their first job during a recession may earn lower salaries and be held at a lower income level regardless of talent, ability, skills or other job-related factors.
Two US cities – New York City and Philadelphia – also recently passed salary history bans. However, the Philadelphia ordinance has been temporarily stayed by a federal court after the Philadelphia Chamber of Commerce challenged the law. Just this week, the Illinois House passed a salary history ban, and several other states, including Maine, Maryland, New Jersey, Pennsylvania and Rhode Island are considering such bills. On the other side of the issue, California’s Governor Jerry Brown vetoed his state’s version of this salary history ban last year, but this year signed into law a bill that prohibits employers from using this pay history to justify gender-based salary disparities. Governor Brown has indicated he believes this measure should be sufficient to help correct the gender pay disparity, without preventing employers from gathering market information through pay history inquiries. A federal law instituting a nationwide ban on employer pay history inquiries was introduced in the House last September.
So for now, only those employers with operations in New York City and the state of Massachusetts need to modify their applications and interview practices that seek salary history information. New York City’s salary history ban is expected to become effective later this year. Massachusetts’ state law is slated with a July 1, 2018 effective date. Note that salary history bans generally do not stop employees from voluntarily providing this information to prospective employers, nor do they penalize employers who obtain it through these means. We will keep you apprised of this new trend as it develops.