Even though I have conducted countless interviews as a hiring manager and as a recruiter, I have to admit that I still cringe when I have to ask how much money a candidate has been making. I don’t know why, maybe because I was taught it is crass to talk about money, or because it feels intrusive, probably because it seems somewhat irrelevant.
Good news for me, that question may be going away, as widespread legislation at the local, state and federal level is being considered that will not allow employers to ask a candidate how much money they have previously been paid.
The legislation is being enacted as national attention rises with efforts to curb the pay gap that exist between genders and minorities. Basically the concept behind the legislation is that eliminating the ability for employers to base future pay scales on past pay scales can aide in slowly eliminating the past pay discrepancies.
Companies would have to base pay rate on market rate compensation data and on the roles and responsibilities of the position.
Massachusetts was the first state to sign BIPARTISIAN legislation and many states from New York to Texas are following suit. I honestly didn’t know that bipartisan was a thing anymore. Good for you, Massachusetts.
Congress has also presented a bill, The Pay Equity for All Act, that would amend the FLSA and prohibit employers from obtaining and using past compensation history prior to an offer being extended.
The US Census Bureau Reports that women make 79 cents for every dollar a man makes. Obviously there are some factors that effect that number. The whole lean In theory, that women are less likely to ask for a raise, so it is not necessarily the employer choosing to pay them less, or maybe they don’t work in the fields that tend to pay more. Economist though consistently find pay discrepancies even when not offset by other variables. So, it seems like it kind of a thing.
Personally, I am pro this legislation and not just because I don’t want to have to ask the question. I think it makes common sense that an employer should base pay ranges on the role and responsibilities for the position they are hiring for, and supporting market data, and not what someone else paid that employee.
Obviously not everyone is for this legislation citing various factors such as increased litigation, not necessarily solving the issue of pay inequality and hindering company’s compensation decision making ability.
I will say that I have not found many companies looking to intentionally discriminate, and try to pay women less, in fact, they just want to pay everyone less. Ha! Kind of kidding. People’s compensation in previous roles have been influenced by many unknown factors and that should not carry over to their new role.
I asked my go-to experts at McHenry what they think.
“Salary data can be helpful in roles like sales where W2 can prove success. Alternatively, it can be bad if someone in ops has a lot of tenure with an employer and is thus underpaid in the market. In that case, it should be more about the candidate value versus where they are financially today.” Says Cynthia Walsh, McHenry’s Talent Acquisition Manager.
Tina Vigoa, Director of Recruiting at McHenry Consulting, went on to say, “The positive to not asking lands in favor of the employee as many clients who have budgeted a dollar amount for a position will lower the salary for an employee who discloses that they were making less at their previous job. Therefore, they still may not be getting paid what they are worth.”
“One last thought related to the importance of paying someone what they are worth is retention…saving a few bucks on the front end may result in turnover since in many cases being underpaid is why someone wants to make a move in the first place.” Says Walsh.
Follow this legislation, as it may be coming to a state near you.
We are curious about how our readers feel about this potential legislation, weigh in by email Erica@Mchenryconsulting.net and I will share the comments.