How Much Money Does It Take to Be Happy?
How the law banning employers from asking about previous compensation could impact your job search.
Job seekers in Massachusetts will no longer have to disclose their salary history to prospective employers in order to be considered for a job, thanks to a new pay equity law signed this week. The law, which goes into effect in July 2018, makes it illegal for employers to ask job applicants what they’ve earned in the past and makes Massachusetts the first state to ban the practice.
This step is a victory for job seekers, who have long been put at a disadvantage by employers who insist on knowing their past salary history. Employers commonly base salary offers on the information, which has meant that people who have been earning below-market wages are more likely to continue to be underpaid – which has historically been a particular issue for women, who are statistically likely to be paid less than their male counterparts for the same work.
“The prohibition is designed to stop perpetuating pay inequality from employer to employer when employers offer to pay women applicants less than their male counterparts because the men were paid more at the last employer,” says Amanda Marie Baer, an employment lawyer at Mirick, O’Connell, DeMallie & Lougee, LLP in Massachusetts. “For example, if a company is hiring two accountants, Pam and Paul, and knows their respective salary histories, it may be inclined to offer Pam $80,000 because she was paid $60,000 by her last employer, while offering Paul $90,000 because he was paid $70,000 by his last employer – resulting in a $10,000 pay gap. If the company does not know Pam and Paul’s salary histories, it may offer an equal salary of $85,000 to both.”
Companies that do this often assert that salary offers pegged to a candidate’s previous pay are generous increases, even when the offer ends up causing this kind of gender gap or results in below-market pay.
Of course, employers who ask about salary history often claim that knowing how much a candidate earned in the past helps them understand how other companies have valued that person’s work. But employers should be able to determine a new hire’s value themselves, based on the person’s experience, accomplishments, skills and track record, as well as the responsibilities they’ll be assuming in the new role. Plenty of companies don’t request salary history and still manage to figure out what a job or a new hire is worth to them. In fact, a company that doesn’t know what a position is worth is a company that hasn’t done sufficient planning and analysis before advertising a job opening.
But while this new law is great for job seekers in Massachusetts, what can you do if you live in any of the other 49 states and thus are still subject to intrusive questions about past earnings from employers?
The best thing that you can do when employers ask for your salary history to answer the question they should have asked – which is about what salary range you’re seeking now. So for example, you might say, “I’m looking for $60,000 to $70,000.” In many cases (more than you might expect!) the person you’re talking to will accept this answer and move on with the conversation. But if the interviewer insists on learning what you’ve made previously, you can try being more direct about the fact that you don’t care to share that private information. You can try saying, “My previous employers have considered their salary structure confidential, but I’m looking for a range of X to Y” or “I’ve always kept that confidential, but I’m seeking a range of X to Y.” Some interviewers will accept that, and others won’t. If they don’t, at that point you’ll need to decide if you’re willing to hold firm and risk shutting down the process or not.
And if you do get pressured into disclosing your salary history and you worry that it will be used to lowball you at the offer stage, keep in mind that you can contextualize the salary information for your interviewer. For example, you might note that your most current salary is under-market and is the primary reason that you’re looking at other organizations and that you wouldn’t consider changing jobs for less than a certain salary amount.
And meanwhile, keep an eye on Massachusetts’ law. It may be the first in a trend that could spread to your state.