Hiring and Growth

Where You Can Ask Questions About Salary History and Where You Can’t

Mohini Kundu Content Marketer, Gusto 
20190725_Salary History Ban Header

You’ve probably heard a lot about salary history bans being adopted across the country to help fight the gender pay gap. But fewer people are talking about why some states are passing legislation to prevent the bans.

The reason comes down to an issue that’s kind of a big deal for small business owners: compliance.

Some states have laws preventing local governments from passing legislation that conflicts with statewide employment laws, like paid sick leave requirements or salary history bans. This practice is called preemption, and the laws help prevent confusion for employers who would be unsure about which rules to actually follow.

Simple time tracking that syncs with payroll.

Where you can—and can’t—ask salary history questions.

So far, 16 states and 17 local governments (plus Puerto Rico) have banned employers from asking candidates about their pay history. On the other hand, states like Wisconsin have passed preemption legislation to prevent the passage of salary history bans.

The divide sometimes even exists within a single state. For example, Michigan has a statewide law prohibiting its local governments from passing salary history bans. However, Michigan’s new governor just passed a salary history ban for its state departments and certain agencies.

Salary History Ban Infographic

Why some states are banning salary history bans.

Having one set of local laws can make it easier to understand what practices businesses need to comply with, resulting in fewer fines for business owners.

When local and state laws differ, it can be especially taxing for small businesses, according to Eric Bott, state director of Americans for Prosperity Wisconsin. “From an employer perspective, they cannot function with a patchwork quilt of regulations,” he tells Bloomberg Law.

Why salary history bans are important.

Salary history bans began to gain momentum as a way to address unequal pay between women and men. The sad reality is that women typically earn 80 cents for every dollar a man earns. Some may argue that banning pay history questions won’t solve our bias issues, but it does put a spotlight on the issue.

“It forces companies to sit down and say: ‘OK, why were we doing this before? How should we set compensation now that we don’t [use pay history]?’” Paradigm founder Joelle Emerson tells the New York Times.

Want to stay compliant and do the right thing? Don’t wait for the law. Nix the question yourself.

It’s important to know what rules you need to follow according to the law, but there’s a good case for throwing out the salary history question either way.

“We’ve seen a lot of [businesses] adopting the spirit of law, understanding bans on salary history inquiries are about pay equity,” Mollie Mantia, director of compliance for ADP Talent, told the Wall Street Journal.

Big businesses like Amazon, Wells Fargo, American Express, Cisco, Google and Bank of America have stopped asking salary history questions during their hiring processes. A WorldatWork study found that 37 percent of surveyed employers have done the same, and 40 percent of the employers who haven’t are likely to do so in the next year.

Even in places where employers can ask salary history questions, there may be laws preventing them from using that information to set pay rates, like in Washington.

So while lawmakers sort out the details, you can start reshaping your internal pay policies for the future:

  • Even if you ask salary history questions, don’t use them to determine your team’s salary.
  • Do as much research as you can about the market and your peers.
  • Train your hiring managers on how to follow the new laws.
  • Don’t release salary information for previous employees.
  • Institute a negotiation process that lets candidates advocate for themselves.

Salary history bans are only one potential solution to the pay gap dilemma. Keep an eye on where bans are being passed, and create a hiring process that helps employees earn what they’re really worth.

Updated: July 31, 2019

Mohini Kundu
Mohini Kundu Mohini Kundu is a news editor on the Gusto content team. She studied journalism at Northwestern University and started her career at The Huffington Post before embracing the #startuplife.

Comments

  • Mike Zoe

    For small businesses, this stinks. Governments are making it easier and easier for large companies to throw money at their staffing problems while encouraging consolidation.

    Reply
  • Mary Meek

    The current salary history ban in Louisville KY only applies to Metro Government jobs, not a city wide ban. So the chart is a little misleading.

    Reply
    • Gusto Editors

      Hi Mary, thanks so much for calling this out. The graphic currently maps any salary history bans that have been passed around the country, but we will revise it to mention who exactly is impacted if the laws don’t apply to all employers. Appreciate your feedback!

      Reply
  • Tyler

    Does the ban include recruiters in most cases?

    Reply
    • Gusto Editors

      Hi Tyler! Some laws specifically mention both employers and employment agencies, but the exact provisions can vary from state to state or city to city. Your best bet is to read up on your local laws and consult a legal advisor if you have questions.

      Reply

*Required fields

Your email address will not be published.

Back to top