“Pay History” bans – do they complicate hiring practices?

Just as employers across the U.S. are getting used to “Ban the Box,” states and cities are now passing ordinances banning “Pay History” inquiries. These laws restrict employers from inquiring about salary histories or benefit packages. Some also prohibit companies from screening based on prior salaries.

Delaware, Massachusetts, Oregon and Puerto Rico have enacted such laws, and California has a law prohibiting salary inquiries in certain situations. At least eight other states are considering similar measures — Illinois, Maine, Maryland, New Jersey, New York, Pennsylvania, Rhode Island and Vermont. Similarly, New York City and Philadelphia have laws prohibiting salary inquiries, although Philadelphia’s was being held up in court.

Pay history bans are part of a national trend towards protecting applicants from discrimination, specifically eliminating a long-standing gender-based pay gap that, according to the Census Bureau, has women earning about 80 cents for every dollar earned by men. Advocates argue applicants should be offered compensation packages based on traditional hiring criteria, as well as their academic experience and work history. The fact a worker was underpaid at an earlier job should not influence the decision, argue proponents.

Those opposing these laws note salary histories are part of the entire job experience for a worker, and an unusually low salary for a position may indicate deficiencies, such as less competency than others in the same role.

These laws do not prohibit employers from discussing and negotiating salaries, as long as the employer avoids asking for an applicant’s compensation history. After an employment offer has been made and compensation terms detailed, employers can usually confirm salary histories for their records.

Today, this situation is constantly changing. GroupOne Background Screening recommends for all employers to consult with an attorney to determine what salary history restrictions are in effect where they are located.

GroupOne supports the belief that hiring should be based on the entire history of a candidate, a picture created through direct evaluation and with reference interviews, background checks and additional best practices.

Employers that build an extensive profile of a potential employee should not need a “Pay History” to determine the candidate’s qualifications for a job.