Salary history is one of the most commonly asked questions on employment applications. Knowing what a prospective employee currently earns or what they’ve earned in the past can provide you with valuable information to guide your decision as to whom ultimately to hire:
- It allows you to determine whether the candidate is in the same salary range. You want to know at the outset whether a candidate is likely to accept a job offer or whether you are wasting your time considering a candidate that is unlikely to accept a job offer because the compensation expectations are off.
- It provides a glimpse into the candidate’s employment history. If salary history shows decreases, rather than increases, with successive employers, it may indicate issues with the candidate’s job performance or lead to questions about the circumstances under which they left a prior job.
- It allows you to see how prior employers valued the candidate’s work.
- It also gives you leverage in making a job offer and negotiating a starting salary.
From the candidate’s perspective, the salary inquiry produces an interesting dilemma – disclose salary history and risk getting trapped in a below-market salary or (politely) refuse to disclose and risk getting shut out of the job altogether.
A new law in Massachusetts, which goes into effect in 2018, is aimed at eliminating this dilemma entirely. The law makes it illegal for employers to ask job candidates about salary history. Proponents of the law say that it is intended to prevent the perpetuation of below-market salaries, particularly for women who are on the lower end of compensation scales in many industries. The idea is that companies will be required to value candidates based on their worth – not on what they earned in the past, making it less likely for pay inequality among genders to continue where those inequalities were based on undercompensated past jobs.
While this new law only affects employers in Massachusetts, what are companies in other states to do? Some companies may choose to focus on the candidate’s salary expectations, rather than salary history. But, until the law changes in other states, employers can continue to ask candidates the salary history question. Just be mindful that when you consider an applicant’s salary history in making a job offer, you are valuing the candidate in a manner that is both gender equal and premised on your own independent evaluation of the candidate’s value to your business.