What Is Salary History Ban?
A salary history ban is a type of employment law that prohibits employers from inquiring about a job applicant's past wages or compensation during the hiring process. These regulations aim to break the cycle of historic discrimination that can perpetuate lower pay for certain demographic groups by preventing a new job offer from being anchored to potentially unfair previous earnings. The salary history ban typically applies to initial inquiries during job applications and interviews, though the specific scope can vary by jurisdiction.
History and Origin
The movement to enact salary history bans gained significant momentum in the mid-2010s as a legislative approach to address persistent wage disparities. Massachusetts was a pioneer, becoming the first U.S. state to prohibit employers from requesting previous salary details in August 2016.13 This landmark legislation, signed by then-Governor Charlie Baker, was designed to encourage employers to offer remuneration based on an applicant's value to the organization and the market rate for the position, rather than on their prior earnings.12 This approach was championed by advocates of equal pay, who argued that relying on past salaries could perpetuate a low wage gap for women and minority groups, effectively carrying historical pay inequities from one job to the next.11 Following Massachusetts' lead, numerous other states and municipalities across the United States adopted similar salary history bans, contributing to a growing patchwork of regulations aimed at fostering greater pay equity within the labor market.9, 10
Key Takeaways
- A salary history ban prohibits employers from asking job applicants about their previous pay.
- The primary goal is to combat wage disparities by preventing past discriminatory pay from influencing future earnings.
- These bans encourage employers to base compensation offers on the job's requirements and the applicant's qualifications and skills.
- Many states and localities have enacted salary history bans, with variations in their specific provisions and scope.
- While aimed at promoting pay equity, some critics raise concerns about potential impacts on employer hiring practices.
Interpreting the Salary History Ban
Interpreting the salary history ban involves understanding its core purpose: to foster a more equitable and transparent approach to compensation and recruitment. For job seekers, it means they should not be prompted to disclose their past earnings, empowering them to focus negotiation on their skills, experience, and the value they bring to the role. For employers, it necessitates a shift in how they determine salary offers, moving away from relying on historical data to instead setting pay based on factors such as job responsibilities, market rates for similar positions, and the candidate's qualifications. This encourages companies to proactively define appropriate salary ranges for positions, rather than basing new hire salaries on a candidate's previous pay, which may have been influenced by systemic biases.
Hypothetical Example
Consider Jane, a software engineer applying for a new role at Tech Innovations Inc. In a jurisdiction with a salary history ban, during her interview process, the hiring manager at Tech Innovations Inc. focuses entirely on her skills, experience, and what she expects to earn for the new role's responsibilities. They do not ask about her previous salary at her last company.
When Tech Innovations Inc. extends a job offer to Jane, the proposed salary is determined by the company's internal compensation structure for similar roles, market data for software engineers with Jane's qualifications, and the specific duties of the position. Jane, unburdened by disclosing a potentially lower past salary, is able to negotiate based on her perceived value and the industry standard, rather than being anchored to her prior earnings. This process exemplifies how a salary history ban aims to ensure that an individual's past pay, which might have been subject to a wage gap or other inequities, does not negatively influence their future earning potential.
Practical Applications
Salary history bans have direct practical applications in several areas of the labor market and employee rights. They primarily impact the hiring process by reshaping how employers approach compensation discussions. Organizations operating in jurisdictions with these bans must revise their job applications, interview scripts, and internal policies to ensure compliance. This often involves training human capital and recruitment teams to focus on a candidate's skills, experience, and target salary expectations, rather than their past earnings. Many laws also prohibit employers from obtaining salary history information from other sources, such as previous employers, unless the applicant voluntarily provides it.8 Research suggests that these policies have had a tangible effect, with studies indicating that workers, particularly women and people of color, who changed jobs in areas with salary history bans saw greater pay increases compared to those in areas without such bans.7 For instance, a study mentioned by the Center for American Progress noted that job changers experienced approximately 5% higher pay increases in the presence of a ban, with even larger benefits for women and African Americans.6
Limitations and Criticisms
While salary history bans are enacted with the intention of promoting equal pay and reducing the wage gap, they are not without limitations or criticisms. Some argue that by preventing employers from accessing a candidate's prior salary, these bans may remove a potentially informative signal about a worker's productivity, leading to increased uncertainty for employers.5 This could, in some cases, result in lower initial wage offers for new hires, particularly in the public sector, as employers might adopt a more conservative approach when lacking a historical benchmark.4
Furthermore, some critics contend that these bans can complicate the negotiation process. Employers may find it challenging to determine an appropriate job offer without insight into a candidate's past earnings, while applicants might be reluctant to state their salary expectations for fear of being screened out or under-valuing themselves.3 Despite these concerns, legal challenges against salary history bans, such as those arguing a violation of free speech, have generally been upheld in favor of the bans, emphasizing their public policy objective of addressing historical discrimination.2
Salary History Ban vs. Pay Transparency
The terms "salary history ban" and "pay transparency" are often discussed in the context of fostering equitable compensation, but they refer to distinct legislative approaches.
A salary history ban specifically restricts an employer's ability to inquire about or use a job applicant's past wages when making hiring or compensation decisions. Its primary goal is to prevent the perpetuation of historical pay disparities that may have resulted from systemic discrimination, ensuring that a new employee's earnings are not anchored to potentially unfair prior salaries.
Pay transparency, on the other hand, involves the disclosure of salary ranges or rates for open positions, either proactively in job postings or upon request. It focuses on providing applicants and employees with information about what a role pays, aiming to empower individuals in their negotiation and promote fairness across the workforce. While a salary history ban dictates what an employer cannot ask, pay transparency laws dictate what an employer must share. Some jurisdictions have enacted both types of laws, recognizing that they can complement each other in promoting fair labor standards.
FAQs
Q: Does a salary history ban apply if I volunteer my past salary?
A: Most salary history bans prohibit employers from seeking or relying on your salary history. However, if you voluntarily disclose your past salary without prompting, an employer may, in some jurisdictions, be permitted to confirm it. Regardless, the ban aims to prevent them from using it as the sole basis for your new compensation. You are generally protected from retaliation for not providing this information.1
Q: Why are salary history bans important?
A: Salary history bans are important because they aim to address the systemic wage gap that often affects women and minority groups. By preventing employers from basing new salaries on potentially lower historical earnings, these laws help ensure that new pay rates are determined by the job's requirements and an applicant's qualifications, promoting greater equal pay opportunities.
Q: What should employers do to comply with a salary history ban?
A: Employers in jurisdictions with salary history bans should review and update their hiring process and job applications to remove questions about past pay. They should also train their recruitment and hiring personnel on the specific requirements of the law, focusing on discussing salary expectations rather than historical earnings. Establishing clear internal compensation bands for roles is also a helpful compliance measure.
Q: Do salary history bans cover all types of jobs?
A: The scope of salary history bans can vary by jurisdiction. Some apply to all public and private employers, while others may only cover government agencies or employers above a certain size. It is important to check the specific employment law in the relevant state or city where the job offer is being made or where the work will be performed.