You May Get into Trouble for Asking the Salary History Question: Learn About the Salary History Ban

Salary History Ban

The list of states and jurisdictions where questions relating to salary history are outlawed keeps growing every year. In a bid to ensure that all persons working in the United States — men, women, White, Black, Hispanic, or of any other origin — have access to equal compensation, salary inquiries during interviews or before hiring are now prohibited in several states across the country. This means that employers have to devise another means to find out about the salary histories of interview candidates.

New York, Puerto Rico, Ohio, Pennsylvania, California, and Michigan were among the first states to legislate against asking prospective employees about their current or past salaries before extending a job offer. Looking at the matter closely, we understand that this is a calculated move by the government to bridge the gap on pay discrimination, especially for women and minority groups. The recent census reveals that despite our advancement as a society, women still earn less than men for doing exactly the same jobs. In 2019 women earned 82 cents for every dollar men earned — about 18% less. It is believed that asking the salary history question is the main factor perpetuating the gender pay gap or gender wage gap in America.

Today, about 20 states and 21 cities, including local jurisdictions, outrightly prohibit employers from asking about or obtaining information on employees' salary and compensation history during interviews.

Some Key Case Studies

San Francisco, California

San Francisco is one of the U.S. cities that prohibit salary history inquiries on any prospective employees. The city’s ordinance on the subject became effective on July 1, 2018. It prohibits employers from asking job applicants about their current or past pay, or using the information obtained to set the employee’s pay. In addition, the ordinance also prohibits employers from disclosing a current or past employee’s compensation and benefits without their consent.

Washington, D.C.

Although the gender pay disparity in the District of Columbia is lesser than in other states, reports still have it that there's an 11% pay gap. Hence the prohibition of District government agencies from asking candidates for their salary history unless the candidate volunteers the information after an offer of employment has been made. Note that the directive, which became effective on November 17, 2017, applies only to government agencies in D.C.

Philadelphia, Pennsylvania

The city of Philadelphia’s pay history ban went through some hoops and court processes but later became effective on September 1, 2020. It prohibits everyone (including public agency or government authority) doing business in the city through employees or anyone who employs one or more employees (exclusive of parents, spouse, or children) from asking a job applicant in writing or otherwise, about their past or current pay, benefits, or compensations.

Chicago, Illinois

Although the state-wide salary history ban in Illinois became effective on January 15, 2019, Chicago already had an order in place since April 10, 2018. However, it only affected city departments. Currently, the state's law extends to all cities within the state. While it prohibits direct inquiry on salary history, it allows curious employers to discuss applicants' salary expectations as a way of understanding where they're coming from.

Cincinnati, Ohio

Except for state and local governments, the City of Cincinnati and employers with 15 or more employees in the city may not ask applicants about their salary history. Also, they may not rely on known salary histories to set employee pay. Employers are also expected to provide (upon reasonable request) a pay scale for a position for which a job applicant has been given a conditional offer of employment.

Implications for Employers

Excerpts from the New York bill prohibiting employers from inquiring about a prospective employee’s salary history reads:

"This bill would prohibit employers from inquiring about a prospective employee’s salary history during all stages of the employment process. In the event that an employer is already aware of a prospective employee’s salary history, this bill would prohibit reliance on that information in the determination of salary. When employers rely on salary histories to determine compensation, they perpetuate the gender wage gap. Adopting measures like this bill can reduce the likelihood that women will be prejudiced by prior salary levels and help break the cycle of gender pay inequity."

This shows that some states like New York and Louisiana even take it a step further by also preventing employers from using salary history information — in case they already have it — to determine an employee's pay. Some laws also prevent employers from disclosing an employee's past salaries to another entity, while others offer protective cover to employees when they stand their ground on the matter or report any activity violating these laws. As an employer of labor doing business in any of these locations, it is important to stay updated on trends surrounding subjects like this to avoid messing with the law.

If your employment policies currently incorporate inquiries on salary history, it would be wise to review and update the policy and have HR or concerned stakeholders adopt the changes right away. In a situation where an employer is not physically based in a state where asking about salary history is banned, but is looking to employ someone from that location, it might be a little complicated. However, to play safe, the employer can smartly go around the matter or avoid it altogether.

Employers in Illinois, Ohio, and Missouri, are free to ask candidates about their salary expectations if they wish to get an idea of how much they currently earn or were paid in their former jobs. In light of these, HR managers will, therefore, need to train HR executives and update employment processes to reflect the new changes. Essentially, the changes that need to be made involve reviewing existing employment policies and processes, communicating the updates/changes to HR executives, then training them, if necessary.

Conclusion

Congress has been considering passing a bill banning salary history across the country for quite some time now. However, the move does not have the buy-in of all stakeholders yet, especially the U.S. Equal Employment Opportunity Commission (EEOC). The Biden-Harris administration has made a move in this direction by endorsing the passage of the Paycheck Fairness Act to strengthen the Equal Pay Act and eliminate gender-based pay disparities in the U.S. workforce.

Meanwhile, other states like Nevada are joining the trail of States and cities that have banned salary history inquiries. Following this trend, it is expected that more states and localities will join. Employers then must learn to adjust accordingly.

For more help and advice on making HR changes and creating policies that help advance your business, you may contact us at the Mission HR today. We're happy to discuss your growth and help you make the right choices. We are a leading partner in the PEO, HR, payroll, and benefits outsourcing marketplace, and we are positioned to provide result-oriented services for small and medium-sized organizations, and government contractors.