A progressive new Massachusetts law banning asking candidates for salary histories during the interview process was signed on August 1st of this year. This law has quickly gained traction, more than any other employment law prior. Just four weeks later, New York City and the state of California have already signed similar laws. Now a delegate from D.C. will introduce the legislature to Congress to make it a nationwide ban.
Little question, big impact
The driving purpose of the law is to increase pay equity among workers, mainly women. Since women are underpaid relative to men performing the same or similar work, the continued practice of basing a new hire’s compensation off of their last jobs compounds the ongoing inequity. Although other groups stand to gain as well. Recent college graduates who started their first jobs during the recession may see their rates catch up. According to some HR leaders, this small change could “eliminate the gender wage gap within a decade.”
Old practice upended
This change upends what has long been a common practice in recruitment. Companies often put the salary question on applications as a way to whittle down large numbers of candidates for open jobs. Without being able to use this question as screening criteria, hiring mangers will have to find other ways to determine if there is a match between what candidates are looking to earn and what the company can afford to pay. An obvious work around is to ask what the candidate is expecting in terms of salary, but it remains to be seen if this will be a viable option. As of right now, we don’t know. There will be more coming as the law is implemented.
Since many companies craft their offers based on a candidates past salary level, they will need to find new ways to evaluate a candidate’s value. Knowing how much the position is worth to your organization is a good starting point, followed by comparing the candidates experience, skills, past achievements, against the scope of responsibilities in the new position, and not least fair market value for your area.
To do list
This law and its variations are going into effect quickly in different cities and states across the US now. National changes could be soon to follow. Organizations will want to be aware of laws in the cities and states in which they hire, and at the minimum remove salary questions from job applications and train hiring managers not to ask salary related questions in interviews where prohibited. At most, it’s probably a good time for employers to conduct an audit of their pay practices, looking for any discrepancies between employees performing ‘comparable’ work.