“How much did you make at your last job?”
Until recently, it was fairly standard practice to ask job candidates about salary history in interviews or on job applications.
But not anymore. Now, it’s becoming increasingly off limits.
More and more states are adopting laws that prohibit asking job candidates about their salary history. The laws are part of a recent effort to fight gender discrimination and narrow the pay gap between men and women.
The salary history question has been banned in whole or part, or will be banned in the future, in California, Delaware, Massachusetts, New Orleans, New York City, Oregon, Philadelphia, Pittsburgh and Puerto Rico. It’s important to note that the ban may only apply to public employers or government contractors in some locations.
And more cities and states will likely follow.
The move away from asking salary questions is seen as positive for job seekers, who are no longer chained to what they made in the past.
However, these new restrictions pose some challenges for the individuals or teams responsible for a company’s hiring process, especially those recruiting and interviewing candidates. As a business leader, how can you determine fair pay that reflects a candidate’s experience and qualifications in an era when you can’t legally ask about their past salary?
These savvy steps can help you craft competitive salary offers appropriate for each candidate’s skill level, while staying on the right side of pay equity laws
1. Look for salary history clues in their résumé
Because you won’t have salary history to go by, you’ll have to dig deeper into your candidates’ background for information. When you review their résumés and LinkedIn profiles to see what positions the applicants held last, how many years of experience they have and past responsibilities, take time to read between the lines.
Job titles alone don’t always tell the whole story. For example, a director of sales at a small company might handle a variety of responsibilities but manage no subordinates. So, the salary range that matches his or her experience may be more in line with what you pay a manager at your company.
2. Conduct market research to gauge salary history
Once you’ve done your due diligence on your job candidate’s background, you can use a job search website to check the average salary range for that job title in your job market.
Keep in mind that these websites often rely on self-reported salary data, and people typically overinflate their salaries. As a result, the salary ranges given may be a bit higher than what they actually are.
And don’t forget your warm market. You can also tap into your network of family, friends and colleagues for more information about the average salary range for the position you’re trying to fill. Thorough market research takes into account many different sources, including those you know first-hand.
3. Set your salary range
What are you prepared to pay the job candidate? While it’s common practice to set salary ranges according to standard job descriptions, some business leaders still prefer to approach the salary conversation with no clear figure in mind and see where negotiations take them.
That’s a mistake and can lead to pay equity claims.
If you don’t have at least a range in mind, you have an awkward salary conversation ahead of you. You need to know where you stand. You also need to be able to show you’re paying candidates equally for the position, with any differences based on legitimate non-discriminatory reasons, for example, experience.
Use the information you learned from your market research to get a sense of the fair market value for the position and set a salary range that’s competitive and makes sense for your company’s budget.
4. Tweak your salary question
Instead of inquiring about what they made at their last job, ask, “What are your salary expectations for this position?”
When you make this one simple tweak to the salary question, you stay out of trouble and, in most cases, you get reasonable salary requests from job candidates.
For example, job candidates making $40,000 a year are probably not going to ask for $150,000. People changing jobs typically ask for a 10-20 percent raise on top of their previous salary.
What happens if job candidates volunteer their salary history?
Stop them, let them know you are not seeking salary history information, and make sure to document in your notes that they self-disclosed their salary. Don’t reflect their salary amount in any notes.
Also, don’t ask for salary history on a job application. And when you check W-2s to verify employment (only after extending an offer, and with the candidate’s permission), ask their former employer to remove salary information.
5. Make a detailed offer
Once you have all the information you need, have an in-depth discussion with the job candidate about the compensation you can offer, including benefits and perks, and exactly what the role requires. This will save you time in weeding out candidates who feel the offer doesn’t match their expectations.
Basically, “This is what we pay. Is it going to work for you?”
If not, they can move on. Or, if you have some wiggle room, you can come back with a figure that’s closer to what the candidate had in mind but will work for you both.
Managing the transition
Even if you don’t do business in a state or city that has enacted pay equity laws, they’re likely headed your way in the near future. And you want to be in a good position to defend any pay equity claim under both the Equal Pay Act and Title VII.
So, it’s a good idea to stop asking job candidates questions about salary history now. Get in the habit before your state employment agency starts looking for companies that aren’t following the laws.
To protect your company from slip-ups:
- Change your job applications and interview guides to remove salary history questions.
- Train team members about the new laws and how to stay in compliance. This includes human resources, recruiters, management and anyone else who interviews job candidates.
- Consider hiring a recruiting professional to manage the process from start to finish, and help you stay in compliance with new laws and regulations.
Salary history bans are just one example of ever-changing employment laws. Learn more about what you can do to steer clear of some of the most common HR pitfalls by downloading our free e-book, 7 most frequent HR mistakes and how to avoid them.