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Salary history

What Is Salary History?

Salary history refers to an applicant's past earnings and compensation from previous employers. In the context of Compensation Practices, this information has historically been used by prospective employers during the hiring process to determine a new hire's pay. The practice of collecting salary history has faced increasing scrutiny due to its potential to perpetuate existing pay disparities, such as the wage gap, and contribute to systemic discrimination. Many jurisdictions have enacted laws to limit or prohibit employers from inquiring about or relying on a candidate's salary history.

History and Origin

The practice of employers requesting a candidate's salary history became a standard part of the job application and negotiation process over many decades. Employers traditionally used this information as a benchmark to gauge an applicant's market value and to set new compensation. However, this common practice came under increasing scrutiny from the mid-2010s. Critics argued that relying on salary history inadvertently perpetuates existing pay equity issues, as past pay discrimination could follow individuals from job to job.10

The movement to ban salary history inquiries gained significant momentum starting with Massachusetts in August 2016, which passed the first statewide ban. Following this, numerous states and localities across the United States began adopting similar regulations. By December 2020, 19 states and various local jurisdictions had implemented some form of salary history ban.9 The primary objective of these legislative efforts is to break the cycle of discriminatory pay practices and promote more equitable compensation based on job responsibilities and market value, rather than an individual's prior earnings.8

Key Takeaways

  • Salary history refers to a job applicant's previous compensation, often including wages, bonuses, and benefits.
  • Historically, employers used salary history to determine new hire compensation, but this practice is increasingly restricted by law.
  • The primary goal of salary history bans is to combat pay discrimination and reduce existing wage gaps.
  • Many states and localities have enacted legislation prohibiting employers from asking about or relying on a candidate's salary history.
  • The shift away from salary history encourages employers to base compensation on the value of the position and a candidate's skills and experience.

Interpreting the Salary History

While salary history was once a key factor in setting new compensation, its interpretation has evolved significantly due to legislative changes and a greater emphasis on equal pay. In jurisdictions where salary history inquiries are banned, employers are generally expected to interpret a candidate's value based on their qualifications, skills, experience, and the fair market rate for the role within the current labor market. The focus shifts from what an individual has earned to what their human capital and skills are worth for the position being filled. This helps ensure that past discriminatory pay, which may not accurately reflect a worker's true value, does not dictate future earnings.

Hypothetical Example

Consider an individual, Alex, who is applying for a new role as a senior financial analyst. In the past, when applying for jobs, Alex would typically be asked about their salary history, including their previous base salary and bonuses. This information would then inform the new employer's initial offer.

Under a salary history ban, the potential new employer, Diversified Investments Inc., is prohibited from asking Alex about their previous earnings. Instead, the hiring manager and human resources team at Diversified Investments Inc. would evaluate Alex's qualifications, experience, and the responsibilities of the senior financial analyst role. They would determine a competitive salary range based on internal compensation structures and current market data for similar positions. When making an offer, their negotiation would focus on the value Alex brings to the role and the established pay scale, rather than being anchored by Alex's past salary. This approach ensures that if Alex had been underpaid in a previous role, that disadvantage isn't carried forward to their new employment.

Practical Applications

Salary history bans have practical implications across various aspects of employment and workforce management. For employers, compliance with these evolving employment law regulations requires significant adjustments to recruitment and job application processes. This often involves training hiring managers and recruiters to avoid asking about past compensation and instead focusing on skill-based assessments and market-driven salary ranges. Some jurisdictions also require employers to proactively disclose pay ranges in job postings or upon request, further enhancing pay transparency.7

From an employee perspective, salary history bans can empower candidates by removing the pressure to disclose potentially low prior earnings, allowing them to negotiate based on their qualifications and the value of the role. This shift is particularly beneficial for individuals from historically underpaid groups, such as women and minorities, as it helps prevent the perpetuation of the wage gap. The U.S. Office of Personnel Management (OPM), for instance, has issued guidance to federal agencies to prohibit the use of salary history in setting pay for federal civilian employees, demonstrating a federal commitment to advancing pay equity.6

Limitations and Criticisms

Despite the intended benefits of salary history bans, some critics and academic studies have pointed out potential limitations and criticisms. One concern is that removing salary history as an informational signal might increase employer uncertainty about a candidate's productivity, potentially leading to lower initial wage offers for new hires across the board, or even adverse selection where only workers with favorable salary histories volunteer the information.5 A study found that while some salary history bans led to pay increases for job changers, particularly for women and non-white individuals, other research suggested a decrease in new-hire wages in the public sector, without a significant impact on the gender pay gap in the full sample.4,3

Another criticism suggests that while salary history bans address one aspect of pay disparity, they do not fully eliminate the problem. Factors such as negotiation skills, biases in performance reviews, and other structural inequalities can continue to influence compensation. Some argue that focusing solely on salary history might not tackle the root causes of the wage gap, which can be influenced by broader economic factors like cost of living and industry-specific compensation norms.2 Employers may also still be able to infer past earnings through other means, such as the type of companies an applicant has worked for, potentially undermining the intent of the bans.

Salary History vs. Pay Transparency

Salary history and pay transparency are distinct but related concepts in compensation practices, both aimed at promoting fair compensation. Salary history refers specifically to an individual's past earnings and compensation from previous roles. Historically, employers would inquire about this information from job applicants to help determine the starting salary for a new position. The practice of using salary history has been increasingly restricted by laws aiming to prevent the perpetuation of past wage discrimination.

In contrast, pay transparency refers to the openness and clarity around compensation information within an organization or across the job market. This can involve employers proactively disclosing salary ranges in job postings, sharing internal pay scales with employees, or openly discussing how compensation decisions are made. While salary history looks backward at an individual's past earnings, pay transparency looks forward, providing clear expectations about current and future compensation opportunities for a role. Many jurisdictions that have banned salary history inquiries have simultaneously implemented or expanded pay transparency requirements, recognizing that both measures can contribute to greater equal pay and reduce wage gaps.

FAQs

What is the main reason for banning salary history questions?

The primary reason for banning salary history questions is to break the cycle of pay discrimination. When employers base new salaries on past earnings, any historical underpayment due to factors like gender or race can be perpetuated, leading to a persistent wage gap. By prohibiting these questions, the aim is to encourage employers to base offers on the job's value and the candidate's qualifications, promoting greater pay equity.

Which states have banned salary history questions?

As of early 2025, a growing number of states and localities across the U.S. have enacted laws prohibiting employers from asking about salary history. This includes states like California, Colorado, New York, and Massachusetts, among many others. The specific rules vary by jurisdiction, with some banning inquiries altogether, while others prevent reliance on volunteered information or require disclosure of pay ranges. It is important for individuals and employers to check the specific employment law in their area.1

Can an employer still ask about my salary expectations?

Generally, yes. Most salary history bans do not prevent employers from asking about your salary expectations or desired compensation for the role. The distinction is that employers cannot ask about your past earnings. This allows for a forward-looking discussion about fair compensation for the position, rather than anchoring the offer to your previous salary.

How do salary history bans affect job applicants?

Salary history bans can benefit job applicants, particularly those who may have been historically underpaid. By preventing employers from knowing past salaries, applicants can negotiate based on their skills, experience, and the market value of the role, rather than being limited by prior lower earnings. This can lead to fairer starting salaries and potentially higher lifetime earnings, including impacts on retirement savings and other benefits.