Salary History Conundrum: Should Employers Still Ask This Question?
Asking an employee about their salary history is becoming a touchy subject that has exploded into the spotlight this year. Pay equality is forcing employers to take a good, hard look at their recruitment and salary negotiation process.
The states of California, Massachusetts and New York — as well as the cities of Pittsburgh, New Orleans, and Philadelphia — have created legislation that bans employers from asking about salary history.
So employers are left to ask this important question: Should we still continue to ask an employee for their salary history?
The Pros and Cons for Asking About Salary History
Why were employers asking about salary history of new candidates? The answer was simply. It could save them money.
If an employer had set a salary amount for the job position, yet the candidate’s salary history showed that they were paid less than that amount, the employer could lower their own wages while still retaining that employee. It also allowed an employer to obtain a snapshot of the salary history set by their competitors. A rival company could use this information to lure highly-regarded workers from other businesses by setting up a more competitive salary.
Yet there is a downside of asking an employee for their salary history. Many workers simply don’t know what the median average salary is for their work position, as the wage number can change based on their location and varied job duties. They could be getting underpaid for their work. This circumstance can make the employee feel pigeonholed into accepting a lower salary even when they are bringing in additional skills and knowledge to the work position for the benefit of the company.
Also, employees cringe about giving up their salary history because it sets them up at a disadvantage at the wage negotiation table. It can make it difficult to ask for $2K to $5K more for their work when the employer can just pull their salary history information and use it to show that they don’t deserve more than what they were paid for at other places years ago.
Make an Offer Based on Job Position
As an employer, it can be a difficult question to answer on whether you should ask for an employee’s salary history. The one thing to keep in mind is that the offer you make should not be based simply on the provided salary information.
Price the job position accurately to reflect the current job market data and take into consideration additional skills that the employee is bringing to the position. In this manner, you can avoid pay inequalities as well as have a better chance of retaining the employee for the long term.