What Is Your Current Salary? Asking This Question in Massachusetts Will Soon Be Illegal.
On Monday, August 1st, Massachusetts’ Governor, Charlie Baker, signed legislation making it illegal for employers to ask candidates about their salary history during the interview process. The new law, which was welcomed with bipartisan support, is the latest development in a series of legal actions taken across the country to eliminate gender pay disparity.
New Law Will Challenge Hiring Professionals
Effective July 2018, the new pay equity law has major implications for recruiters and hiring managers, who often use salary history information as a leverage point and the basis for salary negotiations. From setting expectations with candidates to putting together enticing offer packages, hiring professionals have long relied on salary history as a guiding light through the uncertainty of the candidate search (Kris Dunn offers some great insights into the value of knowing salary history here).
Under the new law, employers must establish compensation values upfront and transparently communicate these number to candidates at the outset of the interview process. This will ensure that salary levels are based on a position’s estimated worth to the company, rather than on the salary history of a candidate. With these new limitations, employers will now have to be far more strategic in determining compensation levels.
Additional Measures Included to Promote Pay Equity
Beyond the measures discussed above, the new pay equity law also grants all employees the right to openly discuss their compensation. Furthermore, it broadens the definition of what work is considered equal. Equal pay will be required not just for jobs that are alike, but also for jobs whose work is of “comparable character.”
Recruiting and HR Professionals Voice Their Concern
As can be expected, concerns about the new law have been voiced, especially amongst those in the recruiting and HR fields. These professionals see the new law as a drastic and unnecessary limitation, outlawing what is considered healthy, honest, and productive communication with candidates. R.J. Morris, the Director of Talent Acquisition at McCarthy Building Companies, touched on this in his blog post at Fistful of Talent writing, “Hey, did I miss something? Has talking to candidates about money been a problem? Why is someone making a federal/state case out of this?”
Focus of New Law Is Less About Salary Discussion, More About Promoting Pay Equity
To address R.J.’s concern, it must be noted that the heart of the issue is not the discussion of salaries in itself. At its core, the new law is about promoting pay equity . Law backers argue that as a result of decades of deeply rooted pay discrimination, a wage gap still exists between men and women (females make 79 cents to every dollar that a male earns amounting to an annual gender wage gap of $10,762). Therefore, asking candidates for their salary history and using this information to establish pay levels is, in essence, perpetuating discriminatory pay amongst genders (this same phenomenon is also true for minorities, so this new law will help to alleviate pay discrimination amongst minority groups as well). Employment lawyer, Amanda Marie Baer, commented on the intended benefits of the new law explaining:
“The prohibition is designed to stop perpetuating pay inequality when employers offer to pay women applicants less than their male counterparts because the men were paid more at the last employer.”
Coming to a State Near You
Openly accepted by Republicans and Democrats, the new law is being actively promoted as a model for other states to follow. Victoria A. Budson, an Executive Director at Harvard commented on the law, stating, “this is a sea change, and we hope it will be used as a model in other states… the new law will help every single individual who applies for a job, not just women .”
Even pro-employer organizations and business lobbying groups such as the Greater Boston Chamber of Commerce have offered their backing of the new law. With this momentum, it appears to be only a matter of time before this law makes its way to your state. Considering the important role that salary discussions play in recruiting, hiring professionals should begin preparing for these changes and take a proactive approach to addressing them.