Salary History – Just Say No

So, how much do you want? Well, how much is the job? Well, how much do you want?

Age old questions when you are sitting across from a candidate. You don’t want to pay more than is required, and the candidate wants to be paid as much salary as possible. Neither side wants to leave money on the table.

California has now put some guidelines around your access to a candidate’s salary history – you don’t have any.

Yes, I know – California and another restrictive employment law. But before we pile on, let’s take a look at the reasoning behind the regulation.

California wants to address the gender gap in compensation (generally women earn $.80 on the dollar). That gap is compounded throughout her career, and is exacerbated when prior salary level is considered when offering her a new position. The state’s idea is to take history out of the mix, and ‘encourage’ employers to offer salary levels based on the duties required vs. taking prior salary into account.

The January 1, 2018 law is an expansion of California’s equal pay protection, which has been around in various iterations since 1949. The Equal Pay law requires that everyone be paid equally, regardless of gender. In 2016 the law was amended to require equal pay for ‘substantially similar’ work, and prohibited employers from using prior salary to justify paying employees of different genders, different salaries.

The most recent revision further addresses the ‘using prior salary’ restrictions. The new law states that no employer may rely on an applicant’s prior salary history “as a factor in determining whether to offer employment” “or what salary to offer an applicant”. In practical terms this means you cannot:

  • ask for prior salary or salary history on an employment application
  • ask a candidate verbally for prior salary or salary history
  • ask a candidate’s former employers (verbally or in writing) for salary information
  • provide salary information to prospective employers during employment verifications (you may still provide this info, with the former employee’s written authorization, for things such as bank loans etc.)
  • if the candidate asks, you must provide a pay scale for the position

Also keep in mind, salary history includes all forms of compensation – so benefits, bonuses etc. are included on the “don’t ask” list.

There are exceptions. The law doesn’t apply to any salary history information that is disclosable to the public under federal or state law; and the candidate is allowed to voluntarily, and without prompting, disclose salary history. I would advise you to take that last one with a grain of salt – you don’t want to be in the position of trying to prove there was no ‘prompting’.

What to do?

  • update your employment application – remove prior salary questions (by the way, you can ask the desired salary)
  • train anyone in your organization that speaks with candidates – this includes hiring managers, recruiters, senior managers etc.
  • do not allow outside recruiters or agencies to give you salary history information (yes, they are prohibited from asking too, but they may have missed the memo)
  • do not seek salary history information when doing employment references (more on references in a later post – they can be a minefield)
  • do not provide salary history information when responding to employment references
  • establish pay scales or grades for all positions (you don’t want to be in the position of trying to make one up when/if a candidate asks)

And take heart – you are not alone. San Francisco, New York City, Delaware and Oregon are just some of the locations that also have similar restrictions.

The preceding is provided for general informational purposes only, and not intended to constitute legal advice.