Hot Employment Law Topic: How Salary History Bans Can Change Pay Negotiation
When it comes to managing salary history compliance, a proactive approach to gathering information can be critical.
In local, county and state jurisdictions across the United States, salary history laws that restrict employers from asking about prior pay have been put in place to address pay discrimination and systemic pay inequities.
While asking salary history questions is currently lawful in many jurisdictions, this is quickly changing. At least seven states, Puerto Rico, and seven localities have enacted laws affecting private employers to that effect, with 24 bills in 18 states pending. These numbers are regularly fluctuating as the legislative sessions unfold.
"It's a work in progress," says Mollie Mantia, Senior Director of Compliance and Security, NationalAccount Services at ADP, "but it's getting serious."
As the legal landscape surrounding salary history shifts, employers and hiring teams should track any changes and understand the issues that current salary history laws address. At the same time, organizations should adapt their salary negotiation practices to ensure compliance.
What Do Current Salary History Laws Address?
The purpose of salary history laws is to end the cycle of pay discrimination. Some laws explicitly prohibit employers from using pay history to set compensation while others ban pay history questions altogether. Some regulate when salary-related questions may be asked — in other words, it may not be OK to inquire about salary pre-offer, but salary questions may be asked post-offer.
"Many trending legislative bills are addressing equal pay and salary history within the same legislation," says Mantia. "The two go hand in hand, so in some cases, lawmakers are tackling both issues at once.
Every state has its own nuanced salary history restrictions. Observers often liken the established regulations to snowflakes — no two are the same, which makes it even more important to stay informed. If your organization is acting on outdated information or there is a perceived lack of adherence to current regulations, the risk of noncompliance increases.
Where Can Employers Find Reliable Information?
Given the frequent changes to salary history laws, it would be wise to work with internal legal partners or outside employment counsel to monitor developments around salary history bans. To help clients manage this topic, Mantia's team sends clients a salary history map that provides regularly updated information by state.
Organizations can also find updated information on the subject via their state legislatures' websites — just be sure to read the legislation carefully. In some cases, crucial distinctions may exist between regulations that deal with the salary histories of internal applicants versus those of external applicants. This fact is demonstrated in a California law that requires employers to provide an applicant with a pay scale upon request. Other states are following suit and adding this requirement to their own regulations.
"Always read the legislation carefully and look for the definitions," says Mantia. "What's the definition of an employee? Of an applicant? Make sure you clearly understand all the details and specifics, including what your recruiters and hiring managers will do if an applicant voluntarily discloses their salary history."
And salary history bans aren't only about operating within the bounds of compliance and doing right by your employees. Your approach to equitable pay and salary negotiation can also make you stand out as a potential employer and help you hire top talent within your industry.
How Should Organizations Adapt Their Salary Negotiation Practices?
In addition to consulting with legal representatives, Mantia suggests that organizations review their hiring and salary negotiation practices to determine the appropriate use of salary history information. An important point to consider is how complicated it can be to follow different guidelines for every state or locality where your organization does business. Keeping track of specifics can be especially tough for recruiters seeking talent across several localities on any given day.
"Some companies say, 'We don't have the time to monitor this.' And they decide to implement a company-wide policy not to ask about salary history — period," says Mantia.
When faced with bans on discussing salary history at the point of job offer, a common practice among employers is to ask applicants how much they would like to make in the future. Other organizations have started providing pay ranges to applicants.
Both approaches help ensure that the employer and the applicant are on the same page about pay without requiring disclosure of the applicant's salary history. Regardless of the chosen procedure, it's essential that every party understands what's allowed in salary negotiations.
When it comes to managing salary history compliance, a proactive approach to gathering information can be critical. HR leaders and their recruiting teams should educate themselves and work with internal and external experts to ensure that they are accounting for all current regulations and preparing for any upcoming changes.
Instead of waiting for salary history and pay equity legislation to arrive in your state or locality, review your organization's hiring practices now.
Read: Legislative Trends: Salary History Bans
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