To combat bias in the workplace, New York City, San Francisco, Massachusetts and Delaware among other cities and states, passed laws banning employers from asking job candidates about their salary history and several other municipalities are considering to enact similar laws. The new legislation – which, if violated can cost employers up to $10,000 in some cases – is meant to address unintended consequences from long-standing hiring practices than can disadvantage women and other groups impacted by pay inequality practices. Employees across the nation may be eager for the measures to take effect, as a recent survey from Glassdoor found more than half of U.S. workers (53%) believe employers should not ask candidates about their current or past salary history when negotiating a job offer. Not surprisingly, significantly more working women (60%) than working men (48%) feel this way.
While employers may never intend to insert bias into the hiring process, their practices can do just that. So how do employers avoid the unintended consequences of hiring women, or anyone, at a disadvantage – even without regulation or legislation? We caught up with Glassdoor’s chief equal pay advocate Dawn Lyon for insight on how employers can navigate this increasingly important issue. Here’s what she recommends for employers and leadership teams:
Why shouldn’t employers ask about salary history?
What might have been a historically reasonable question can actually trigger some unintended consequences that can lead to widespread pay inequality by gender and ethnicity. If we recognize numerous reputable sources validating the gender pay gap is real and the pay gap is wider for people of color, then by asking prior salary history to inform offers, employers are potentially perpetuating the problem from day one.
What should employers ask instead?
There is an important two-way conversation to be had about compensation, but it is critical to focus on the role and pay expectations for that role, while taking into account the job responsibilities, skills, experience and current market value in addition to the company’s overall pay philosophy. Simply asking, “what are your expectations for pay in this role and why?” will lead to a fruitful conversation that will allow the employer and candidate to each share their thinking and rationale to better understand one another. Before the first interview, hiring managers should work with their HR and recruiting teams to determine the value of the role, get very clear on what will drive a higher or lower compensation package (ie. specific skills, management experience, etc.) and base interview questions around those topics. There are many factors that could determine a candidate’s compensation, but prior or current salary should not be one of them.
What happens if employers ask candidates their salary history?
Laws vary by state so aside from the potential legal ramifications, employers need to be prepared for a different type of answer. Candidates should know first and foremost they are not required by law to answer that question in some jurisdictions. And, employers should expect job seekers to take control of the conversation with a response that reframes the answer to the specific role and prerequisites. For example, one could simply respond, “I’d prefer to focus on my expectations for this role, which is between $[125,000 and $140,000], depending on other cash compensation and benefits. Given my experience and track record doing X,Y and Z and what you and other companies are paying, I believe this is reasonable.” Employers must be mindful that people want to know they are being paid fairly by your company, regardless of what they may have been paid previously.
Is this just an issue for women candidates?
No. Pay equality isn’t just an issue for women, it’s important to all workers. In fact, it’s becoming an important element of a company’s overall employer brand as the majority of men also believe men and women should be paid equitably for equal work and experience. Employers need to be prepared for more direct questions from employees and candidates around their pay practices and should conduct ongoing analysis to ensure gender pay gaps do not exist.
To help employers navigate pay conversations, employers are encouraged to use Glassdoor’s Know Your Worth tool and Local Pay Reports , published by our Chief Economist each month, which provide insight into current market values and pay changes for specific jobs, and to prepare for questions from employees and candidates about compensation and pay philosophy. A free Employer’s Guide to Know Your Worth , with input of human resource executives at Glassdoor and other employers, is also available to better understand the tool and answer questions. In addition, Glassdoor offers a free guide for employers to help them understand and identify potential pay gaps within their organizations.
Glassdoor's Guide to Salary Conversations is also a valuable resource for helping you prepare for discussions around compensation so they’re positive, productive and mutually beneficial for both employers and employees.