Thursday, April 27, 2017

Salary Inquiry Prohibitions Are All the Trend

An employment issue gaining more attention recently is the persistent pay disparity between genders. Depending on which study you choose to rely, women still earn anywhere from 80 to 90% of what men make in the same or similar job.

Some states, including Illinois, as well as local municipalities, are attempting to fix this through legislation other than the protections already provided in the Equal Pay Act.  For instance, just this week New York City passed an ordinance (to become effective in 180 days) prohibiting prospective employers from asking job candidates for their salary history; seeking this information from a current employee, former employee or agent of the applicant’s current or prior employer; or by searching publicly available records or reports for information on the job applicant’s salary history. Additionally, it prohibits employers from disclosing employee salaries to prospective employers. Advocates for these measures argue that by basing future salaries on previous wages, employers can perpetuate the earnings divide. Some legislation also bans employer prohibitions to employees from talking about their salaries. Generally, the laws allow companies to rely on salary information if the job candidate volunteers it.

“We know that when employers see some past salary, they’re likely to take that into account” in setting the employee’s starting pay, says Emily Martin, general counsel for the National Women’s Law Center. As a result, “Too often, when women are paid less than men, that pay disparity can follow them from job to job.”  On the flip side of this discussion, though, is the argument by employers that asking about salary history allows them to set an appropriate pay scale for particular jobs. In many respects, the value of any job is set by market demands.

At least one ordinance like this has already come under court challenge. The Philadelphia Chamber of Commerce has filed suit, arguing that the city’s salary history ban violates individuals’ rights to free speech without demonstrating those employer inquiries actually perpetuate gender-based wage discrimination.

Like “ban the box” legislation in many states, this trend is likely not going away, especially in pro-employee states such as Illinois. Employers should ensure that their pay practices are gender neutral and that the pay ranges for their jobs are based on industry averages, and not just how cheaply someone will work. While employers never want to overspend on salaries, it is better to create salary ranges that incorporate experience and performance than just relying on a candidate’s salary history.