It’s not uncommon for employers to ask job applicants about their salary history. Many use the information as a benchmark to set pay, but companies should stop asking.
In some parts of the country, asking could be illegal. New York City, for example, has passed a law prohibiting employers of four or more employees from asking applicants about their salary history, arguing it perpetuates wage discrimination. The law takes effect Oct. 31.
- Unfair to some. Inquiring into people’s salary history “happens to unfairly impact minorities and women who are usually in a more economically disadvantaged situation,” says Sima Ali of Ali Law Group, a Huntington employment law firm.
- Be objective. Employers should ensure from the beginning of the hiring process that they’re looking at objective, job-related factors, not factors that are individual in nature, she says.
“This isn’t something that’s going to go away,” Ali added, noting legislation like the city’s law has been introduced at the New York State level.
Still, whether your region passed a law or not, businesses need to stop asking the question, period, says Mykkah Herner of Seattle-based Pay Scale, a compensation data and software company. Instead, it’s fair to ask applicants “What are your salary expectations?” he says.
- Plan ahead. Employers should determine what the job is worth and use market data and analytics to set a salary range before the interview, he says. They should be transparent about what that range is when talking with applicants and establish where they fit within that range based on experience and skills.
PayScale studied the gender pay gap and found that when you look at the median salary for all men and women, regardless of job type or worker seniority, women earn just 76 cents for every dollar men earn. However, when you compare men and women who hold the same jobs, the gap shrinks, with women earning 98 cents for every dollar men earn.
- Opportunity gap. This is the bigger issue. Men are 85 percent more likely than women to be VPs or C-suite executives by midcareer, and 171 percent more likely to hold those positions late in their careers, according to PayScale.
This impacts compensation, because typically more senior-level workers get paid more.
- Define role,style. Employers should clearly define the key responsibilities of the job and the behavioral style of the person who should fill it, and then have a financial discussion internally on what they can afford to pay for that position, says Rick Maher, partner and CEO at Effective HR Inc., a Melville consultant.
“There’s a budget and a job description and job title, and that should all be set out in advance, so when you go to the market for hiring, you have a plan you can follow to find the right person for the job at the right salary,” he says.
- Standard questions. You should have a set of questions you ask every candidate, and record the answers, Maher says.
- Pay Equity Act.. Even if Long Island employers aren’t prohibited yet from asking for salary history, they still must comply with New York’s Pay Equity Act, says María Cáceres-Boneau, an attorney in Manhattan at Littler Mendelson, a labor and employment law firm.
It requires that any pay difference between men and women doing the same job be based “on a bona fide factor other than sex such as education, training or experience,” she says. Furthermore, that bona fide factor must be job-related and consistent with a business necessity, she says, noting other factors that would justify a pay difference include a seniority or merit system.
“Employers still have to be careful” not to run afoul of the law, Cáceres-Boneau says.
Roughly 57 percent of employers said there is no gender inequity issue at their business that needs to be addressed, whereas only about 47 percent of employees felt the same way.
Source: PayScale (see http://www.payscale.com/data-packages/gender-pay-gap)