Salary history requests come with risk, illegal in some jurisdictions
By Katie Loehrke, J. J. Keller & Associates, Inc.
Requesting salary history information from applicants is not an uncommon practice, but with the recent focus on pay equity in the U.S., the habit may be more likely to create the foundation of a discrimination claim.
Pay discrimination can occur when employers pay individuals less because of membership in a protected class. In most cases, employers can protect themselves from such charges by identifying business- and job-related reasons for pay disparities.
For instance, a company may find it prudent to offer a man a higher starting salary rate if he had more years of experience or more relevant experience than a female hire. The inequality must be attributable to a job-related factor, rather than being based on sex.
Asking for the information
Most employers that request salary information on job applications do so to help them determine whether they can realistically pursue individual applicants. Since intentions are typically pure, many employers believe that basing pay on an applicant’s salary history is
relying on a job-related factor.
However, if an applicant’s salary has suffered in his or her career based on discriminatory factors, a new employer’s reliance on salary history could perpetuate pay discrimination — and even invite a claim for the new employer.
Evolving legal landscape
In most areas, while employers could still face a discrimination charge for perpetuating pay discrimination, simply asking for salary history is not specifically illegal. In fact, for now, the practice is strictly prohibited in just one state — Massachusetts.
California’s newly effective (January1, 2017) pay equity law indicates that reliance on an individual’s salary history does not justify a pay disparity, but the law does not specifically prohibit employers from soliciting the information on applications (that prohibition was included in an earlier version of the bill but was stricken from the final version). Similar bills have been introduced in other states.
New York City government agencies are also prohibited from requiring salary history on an application, as will be all employers in Philadelphia, 120 days after its wage equity ordinance is signed by city Mayor Jim Kenny.
Salary range over history
Even where asking for salary history is not illegal, employers may want to consider asking instead for an expected salary range
from the applicant. This should still serve the purpose of determining whether the candidate and the company could come to an agreement regarding compensation without collecting salary history information.
Whether an anticipated range is identified or not, employers should take care to ensure that the salaries of newly hired employees are based on factors like the individuals’ qualifications and experience, market salary data, and internal equity.