California is the latest to jump on the train that prohibits prospective employers from inquiring about the salary history of job applicants. Gov. Jerry Brown signed legislation last Thursday which, like similar legislation elsewhere, bans employers from asking about salary history, although it allows candidates to reveal their salary history voluntarily and without prompting. This new legislation, which takes effect on January 1st, will work in conjunction with California law effective at the start of 2017 which prohibits employers from relying solely on salary history to make hiring decisions.
The rationale for this legislation, and others like it, is that employers who know a candidate’s salary history will make a hiring and pay decision in line with that candidate’s salary history. This perpetuates a wage gap for women who still are generally paid less than their male counterparts for the same work. On average, women in the U.S. earn 80.5 cents for every dollar a man earns, according to data released last month by the U.S. Census Bureau. Employers who don’t know a candidate’s salary history will make a job offer based on the salary range determined for the job, and will not make an offer that is the same or slightly higher than the job candidate’s previous wage.
California joins states such as Massachusetts, Washington State, Delaware and Oregon, and cities such as New York City, Philadelphia and New Orleans, in passing this kind of legislation. As we reported here recently, the Illinois House and Senate passed a similar bill which was recently vetoed by Gov. Rauner. The Governor suggested that he would sign a bill that is more like the one in Massachusetts, which requires employers to state the salary range for a position up front. This affirmative requirement will also likely avoid the legal challenges based on free speech violation claims of legislation that prohibits employers from asking salary questions.
Legislative initiatives to prohibit salary inquiries are of the growing trend to erase gender pay gaps. An uptick in lawsuits filed by top females in companies across the nation is also helping put a spotlight on this issue that persists despite federal and state equal pay laws in place for decades.
Employers, both public and private, should take note of this renewed scrutiny on equal pay issues as well as salary inquiries. It is likely a more sound hiring approach to pre-determine a salary range for a job title and base a wage offer within that range that correlates to the candidate’s experience or knowledge. While it’s always tempting to hire an employee at a steal because they were underpaid at their last job; that strategy can often backfire. Employees exchange salary information, whether you like it or not, and an underpaid employee is likely to become resentful, possibly leave employment, or file suit under certain circumstances.