Salary-History Bans: How to Navigate the Changing Legislation

Knowing a job candidate’s prior pay gives hiring managers useful insight during the interview process. But that line of inquiry might need to be buried forever. In states from Massachusetts to Oregon, as well as individual cities, new laws now prohibit asking a job candidate to disclose their salary-history. Some of the laws and penalties for infractions don’t take effect until 2018 and beyond; but it’s time to prepare hiring managers for a new reality.

More than 20 states, plus the District of Columbia, have passed or are actively considering a ban. You can question whether or not the regulations are good policy, and one study suggests that the restrictions are actually amplifying the problems, like gender pay inequality, that they were intended to help solve. But the rules have arrived and they are spreading.

Here’s what you need to know immediately about the new prior pay regulations.

They’re spreading fast.

Massachusetts passed the first prior pay law in August 2016. It had a long phase-in period and doesn’t even take effect until 2018, but other states didn’t wait around to watch the results before following suit. Philadelphia became the first large city to pass its own law in May 2017. New York City has also banned private businesses from asking about prior pay. And at the New York State level, state agencies can no longer ask job applicants about pay history. Other states with regulations kicking in during 2017 or 2018 include California, Delaware, and Oregon.

They have real teeth.

The first wave of prior pay laws clearly intend to make employers take notice. The New York City ban imposes fines up to $250,000 for certain violations. Philadelphia’s regulations make businesses liable for a fine of up to $2,000 and possibly jail time for each occurrence. And in Massachusetts, affected workers can form class actions.

Larger companies will operate in a blend of regulations.

Even though some very populous cities and states have prior pay laws, the impact is still relatively contained. That means companies with locations and business in multiple states will have to choose between applying prior pay policy equally in all locations, or manage on a case-by-case basis. National search firms can partner to help manage the location-by-location specifics of prior pay compliance.

It’s still possible to research a candidate’s probable prior pay.

Even when you can’t directly ask an individual what they currently earn, research and careful inference can still provide valuable insight. For example, the Special Counsel 2018 Legal Salary Guide can guide you to an understanding of the most likely and most common salaries for any particular position in a region.

Asking about desired salary is still okay.

The rules don’t ban all discussion of salary. In particular, you can still safely ask a candidate what they expect to make in the position they are interviewing for.

To learn more about adjusting to the new interview regulations and restrictions, download Special Counsel’s new white paper, “The Perils of Asking For Prior Pay: Navigating Salary-History Legislation” for guidance.

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