Glassdoor, Salary, and Payscale make it easy for job hunters to find out what the standard salary is for people with their job and sometimes the company, giving them leverage for salary negotiations. Employers tend to get a feel for what employees should make by asking their salary history, however, in some places this is becoming an outdated practice.
Why is it a problem?
The main issue that critics have with asking for pay history is that it prevents applicants from being able to make market value if they start from a salary that’s below.
When an employer creates a job posting they typically have a salary range in mind. By looking at the current talent market- using sites like those listed above employers can find out what someone typically makes, which can hold bearing in a salary decision. It does not necessarily need to weigh on a person’s current or past pay.
Liz Ryan explains it by saying you wouldn’t ask a plumber what they charged their last client with a similar problem, you ask what their hourly rate is and decide from there if you’re willing to hire them. It gives employers leverage in the negotiation process and will allow for them to justify a lower starting salary.
Benefits for knowing salary history:
When candidates disclose their salary history it makes it easier for employers to know whether or not it’s within their range of what their able to offer. If it’s much higher than what is being offered or anticipated for the applied position they can move on to applicants within reach of the available pay.
Where can’t employers ask?
San Francisco, Philadelphia, New York City, Oregon and Massachusetts are cities and states where employers cannot legally ask candidates about their salary history. In New York State, employers cannot ask about salary until an offer has already been extended. In 23 states, plus Washington DC, some type of legislation has been introduced to start the discussion surrounding pay.
Most recently, in California, proposed legislation has passed through their General Assembly and to the governor for final verdict. If passed, it would prevent employers from asking, however, applicants could voluntarily provide the information which could impact the employers offer.
The Pay Equity for All Act has been reintroduced in congress which would amend the Fair Labor Standards Act. This would make it so employers could not screen applicants based on salary history; seek the previous wage of an applicant; fire or retaliate against any current or perspective employees because they would not disclose their salary history.
As previously stated, it’s easy for applicants to figure out the average pay for a company or position, therefore, they usually have an idea of what they should be paid. Rather than asking what they have been paid, ask them what they expect to be paid. This answers the question of whether or not they would be willing to work in the range you have mentally set.
Another way would be to share a salary range with applicants- they would know rather quickly if it’s something they would be interested in. This can be based off of statistics throughout the talent market, the skillset value of an applicant, and other available data. If your company is in a state or city where this practice is not allowed there are ways around asking and not wasting your time or the applicant’s.