Is Salary History . . . History?
On August 1, 2016, Massachusetts passed a law to establish pay equity by forbidding employers from discriminating on the basis of gender when employees do comparable work. In that respect, the Massachusetts law is similar to Maryland’s 2016 Equal Pay for Equal Work Act and to the California Fair Pay Act enacted in 2015.
But the Massachusetts law goes further than either Maryland or California did. It prohibits employers from requiring job applicants to disclose their prior wages or salary history. It also prohibits employers from seeking the salary history of a prospective employee from a current or former employer, except that after an offer of employment is made, the prospective employee may authorize an employer to confirm prior wages.
California Tried to Prohibit Salary History Questions
In 2015, along with the Fair Pay Act, the California legislature passed legislation that would have prevented employers from trying to find out a job applicant’s salary history information. But Governor Jerry Brown vetoed the legislation, saying that the bill would prevent employers “from obtaining relevant information” and that the state should give the Fair Pay Act “a chance to work before making further changes.”
In 2016 the California legislature tried again. As introduced, the 2016 version of the “salary history” bill went even further than the 2015 version; it also would have required employers to provide the pay scale for a job upon an applicant’s request. But by the time a watered-down version of the bill reached Governor Brown’s desk and he signed it, the “don’t ask about salary history” and “provide the pay scale for jobs” provisions were gone. Although the legislation amended the Fair Pay Act to state that prior salary, by itself, can’t justify a wage differential, the text of the bill concedes that it is just “codif[ying] existing law.”
Why Salary History Questions Cause Gender Wage Gaps
Why does it matter whether an employer asks job applicants about their prior salaries?
As Alicia Adamczyk wrote in a story for Time.com:
If women and minorities are already underpaid—which, on average, they are compared to white men—basing future earnings on previous earnings won’t help close the gender and racial wage gaps, it just exacerbates them.
Clare Foran, writing for The Atlantic.com, agrees:
If a woman is paid less than a man for comparable work, and her salary is used by future employers as a baseline to determine what she will be paid in subsequent jobs, that financial shortfall may be more likely to persist over the course of her career.
In fact, the National Women’s Law Center says that the lifetime wage gap for women ranges from hundreds of thousands of dollars to over a million dollars.
Additionally, studies by Payscale.com have shown that the social cost of negotiating for higher pay is greater for women, and research compiled by the American Association of University Women indicates that the pay gap starts as early as the first year out of college.
In her article, Foran quotes Ariane Hegewisch of the Institute for Women’s Policy Research, who says:
Enacting these kinds of state laws shows that the world doesn’t collapse when we create additional protections against gender discrimination in the workplace, which is often the argument from opponents at the national level.
Employers who don’t rely on prior salary history have the opportunity to figure out for themselves what an applicant is worth and what the job is worth. As US News contributor Alison Green says:
Employers should be able to determine a new hire’s value themselves, based on the person’s experience, accomplishments, skills and track record, as well as the responsibilities they’ll be assuming in the new role. . . . In fact, a company that doesn’t know what a position is worth is a company that hasn’t done sufficient planning and analysis before advertising a job opening.
Consultant Katie Donovan says that the use of salary history undermines other costly diversity and equality efforts and that companies which spend money on diversity efforts “should not be flushing that money away by disqualifying the very candidates they are having a tough time finding” because of the salary history question.
Legislation to prohibit employers from requiring salary history information is being contemplated in Congress and in Washington DC, New York City, and New Jersey. This subject is not going away. Employers who focus less on previous salary, and more on what the job applicant and the job are worth, can create a better workplace culture and develop a diverse workforce while they battle gender discrimination. This may help employers to avoid the unconscious preferences and generalizations that often arise in the workplace. These biases may result in unfairly limiting career opportunities for existing and potential employees.
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