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Job Hunters Rejoice: That Dreaded Salary Question NO MORE!

Salary

There is a trend sweeping across the U.S. prohibiting Employers, Agencies and Search Firms from asking applicants/candidates about their salary histories.

This means that dreaded interview question: “How Much Are You Currently Earning?” is becoming a question that can no longer be asked.

For job hunters, this is awesome news!  For Employers, Agencies & Search Firms this means you must alter the way you have been interviewing, qualifying and extending offers of employment.   These new laws are passing to fight wage discrimination, eliminate pay gaps and end pay disparities.  The concept behind this movement is that employers should use labor market data, the candidate’s job experience, skills, education, and performance in the interview process to set salary.  You know… set compensation based on qualifications, not a candidate’s salary history.  This trend looks like it will sweep across the nation so it’s wise to alter your recruiting and hiring practices now.

Where Is the Salary Question Currently Banned?

  • California banned private and public employers from asking about a candidate’s pay history.
  • Delaware banned all employers from asking candidates about their salary history.
  • Massachusetts As of July 2018 – all employers are prohibited from inquiring about a candidate’s pay history.
  • New Orleans banned inquiries about all city departments and employees.
  • New York City has banned public and private employers from asking about a candidate’s pay history.
  • Oregon banned all employers from inquiring about a candidate’s salary history.
  • Philadelphia banned all employers from inquiring about a candidate’s salary history.
  • Pittsburgh banned inquiries about all city departments and employees.
  • Puerto Rico As of March 2018 – all employers are prohibited from inquiring about a candidate’s pay history.

What Do the Laws Prohibit?

The law prohibits employers and anyone acting on their behalfs, such as employment agencies and search firms, from inquiring about the salary and bonus history of candidates.  Then using the information in determining the new compensation program offered.

What is Prohibited?

  1. Asking candidates about or soliciting information about prior earnings or benefits (e.g. inquiries on employment applications asking for salary history are prohibited; however, inquiries asking about salary expectations are permissible).
  1. Asking candidates current or former employers about a candidates current or prior earnings or benefits (Note: employers may NOT ask for W-2 information unless the applicant voluntarily offers information about salary history).

What Questions Can I Ask About Compensation?

  1. You may ask the candidate about their expectations with respect to salary, benefits, and other compensation.
  1. You may discuss with the candidate the unvested equity or deferred compensation that a candidate would forfeit or have cancelled by the candidate’s resignation from their current employer and the value and structure of the deferred compensation or unvested equity.
  1. You can ask a candidate about revenue, sales, and production, books of business, profits generated, or other objective indicators of performance. It’s also ok, to ask for documentation to verify this information.  Note: it is NOT permissible to ask about the commissions a candidate earned.

What if the Applicant / Candidate Volunteers Salary Information?

If a candidate voluntarily, and without prompting, discloses salary history then and only then may an entity consider salary history in determining salary, benefits and other compensation for the candidate and in this situation, may verify the applicant’s salary history.  However, we live in a litigious world and if a candidate does volunteer salary information, I would:

  1. Inform the candidate that by law, you are not permitted to ask questions about salary and bonus history.
  1. Document in your interview notes exactly what was said by the candidate and specifically note that this was voluntarily disclosed information.

What Are the Penalties for Asking Salary Information?

Violations of this law will result in steep penalties for employers: $250,000 for each willful (i.e., intentional and knowing) violation.  $125,000 for each unintentional violation.  In addition, you expose your company to lawsuits, backpay, compensatory damages and attorneys’ fees.

What Should I Do to Ensure Compliance?

Candidates (Job Hunters): STOP volunteering your current and past salary history when you are being interviewed for a new position.

Employers / Agencies / Search Firms:

  1. Review your employment application and qualification process and ensure that it does not contain a request for information regarding salary history (e.g., “prior salary” or “last rate of pay”).
  1. Make sure that managers and other staff involved in the hiring process know of the new laws.
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