Last month, Massachusetts passed a new law, which will take effect in July 2018, and make it illegal for employers to ask about a job applicant’s salary history before making an offer of employment. As Stacy Cowley at The New York Times reports (here), the impetus for the new law is to reduce the wage gap between men and women:
By barring companies from asking prospective employees how much they earned at their last jobs, Massachusetts will ensure that the historically lower wages and salaries assigned to women and minorities do not follow them for their entire careers. Companies tend to set salaries for new hires using their previous pay as a base line.
Now, three members of the U.S. House of Representatives, including Congresswoman Eleanor Holmes Norton, the first woman to chair the Equal Employment Opportunity Commission (EEOC), plan to introduce similar legislation federally.
You can read more on this forthcoming bill here. I’ll post a link to the legislation when it is officially introduced.
Good or bad for employees?
Run a Google search on the Massachusetts law and you’ll find scores of article touting its benefits.
But, could restricting company access to salary history actually hurt employees? Well, Rachel Greszler, reporting here, at the right-leaning publication The Daily Signal notes that the new Massachusetts law may bring more harm than good:
When it comes to matching employees with employers, more information is always better. The more employers know about potential employees, and the more job seekers know about potential employees, the more likely there will be a successful match.
Previous pay indicates an employee’s value to their past employers. Often times, pay is even more telling than education or experience.
Withholding valuable information from an employer will only lead to wasted time, low-ball salary offers, and more job turnover.
How should employers respond if a federal version of the Massachusetts law passes?
A SHRM article from Lisa Nagele-Piazza highlights the changes that companies will need to make if the law in Massachusetts becomes the law of the land:
- Job applicants must be updated to remove salary history questions
- Hiring managers must be trained not to ask salary-related questions
- Other potential interviews must also learn the can’s and can’t-do’s of the new law.
She also underscores the benefits of a self-audit. I agree.
Run the numbers for your similarly-situated employees and, be prepared to explain pay disparities based on a objective criteria. Otherwise, eliminate pay disparities that are potentially based on race/ethnicity and gender.