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Those with salary-history bans find the policy easy to manage, survey shows
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There is a nearly even split between organizations that prohibit asking candidates about their salary histories nationwide and those that do so only where laws are in place, according to data released March 20 by WorldatWork, the total rewards association.
The survey of 838 compensation and benefits professionals found that 37 percent of employers have implemented a policy prohibiting hiring managers and recruiters from asking about a candidate's salary history in all U.S. locations, regardless of whether a local law exists requiring a ban. Another 35 percent reported prohibiting the candidate query only where laws are in place banning it. An additional 27 percent of respondents do not prohibit interviewers from asking about salary history. Not surprisingly, the larger the organization, the more likely it is to have implemented salary-history bans across all locations, regardless of local laws.
Further, for those employers that have yet to implement a nationwide ban policy, 40 percent are "somewhat likely" or "extremely likely" to adopt a nationwide policy in the next 12 months.
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"As more cities and states pass laws prohibiting employers from asking job candidates about salary history, more employers are adopting nationwide U.S. policies," said Sue Holloway, WorldatWork director of executive compensation strategy. "I'd expect this trend to continue, especially as pressure builds for employers to justify their pay practices and ensure gender pay equity."
The survey results also show that 44 percent of employers that have implemented a salary-history ban found it very easy to do so. Only 9 percent reported it to be difficult.
"The idea of having to craft a total rewards offer without salary-history information can be daunting to some managers and employers," Holloway said. "But when hiring managers and recruiters are educated and given reliable compensation data on market rates and pay ranges, the need for a candidate's salary history diminishes."
She added that implementing a salary-history ban requires strong change management in how many employers construct compensation offers, but it can be done. Basing new-hire salaries on local market value, retraining recruiters and hiring managers on screening and interviewing, and conducting internal wage audits are a few of the ways employers can get ahead of what's becoming a nationwide trend of prohibiting inquiries into candidates' previous salaries.
Dawn Lyon, strategic advisor and equal pay advocate at employer review site Glassdoor, recommended that before the first interview, recruiters, hiring managers and HR get together to determine the value of the role and what will drive a higher or lower compensation package, and then base interview questions on those decisions.
"Determining the real market price range for a position is the right way to choose a competitive salary level," said Kelly Marinelli, SHRM-SCP, an attorney and president and founder of HR consultancy Solve HR in Boulder, Colo. "Specific benchmarking by industry and geographic location is the best way to home in on a pay level that will be attractive to job seekers without being out of the appropriate range."
Attitudes on Internal Hiring Differ
Just 11 percent of organizations currently prohibit using salary history when setting pay for internal candidates moving to new roles. About 89 percent of employers reported relying on salary histories to evaluate a candidate's pay expectations compared with internal pay levels, and 80 percent said they use salary histories to determine what offer a candidate will find acceptable.
"This one is tricky, because in many organizations the person putting together the offer is the person who also knows the salary," said Kate Bischoff, SHRM-SCP, employment attorney, HR consultant and founder of tHRive Law & Consulting, based in Minneapolis. "The temptation would be to increase salary based upon what someone is currently making but maybe not to where the market would put the salary—to save the organization some cash while knowing that the individual will say yes to the new job."
But using the current salary isn't what the salary history ban laws are designed to do, she added. "They are designed to limit the use of current and previous salaries at the offer stage. So, while I get the inclination, I would still recommend employers use market rates to base salaries."
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