By Jean Roque, President, Trupp HR.
Many think so. On September 14, 2016—just over a month after Massachusetts passed an equal-pay law that prohibits employers from asking about salary histories during the job interview process—the Pay Equity for All Act of 2016 has been proposed.
This bill would amend the Fair Labor Standards Act to make it unlawful for an employer to:
- Screen prospective employees based on their salary history or
- Ask any prospective employee for salary history from their current or former employers.
What are the implications?
In addition to changing application forms and systems, employers will need to rethink their approach to screening applicants. Salary history is often assumed to be an indicator of an applicant’s fit with a role—too low a salary history implying the applicant is not qualified and too high a salary history indicating the applicant is overqualified or not interested in the salary range available.
Employers will likely discover this change would force their hand—requiring employers to be more intentional with setting pay ranges and more transparent with communicating those ranges to applicants. Otherwise, employers may find themselves in an interviewing and salary negotiation dance that is unnecessarily lengthy and unproductive.
How is this a good thing?
Employers have had a long run of getting away with determining pay based on what they can get away with for a given employee and position. While employers are likely not ill-intended, this frequently translates into paying in accordance with an employee’s past salaries. For women and minorities, all too often historical salaries are lower than their white, male peers. The result? Women and minorities are hired and receive incremental pay advances that keep them at a lower income level.
Employers who are already making pay decisions based on sound compensation philosophy, salary structure, and pay policies, should be relatively unaffected by new pay equity laws. However, employers who rely on an applicant’s salary history to guide job offer amounts may want to consider proactively adopting improved pay practices before these changes are imposed on their business.