HOW TO HIRE WHEN YOU CAN’T ASK ABOUT PRIOR SALARY
New rules limit what you can ask about a job candidate’s prior salary. These tips will help you hire legally and stay competitive
AT LIFE IS GOOD, the Boston-based apparel company, asking candidates about their prior salaries was a crucial part of the hiring process, especially for senior positions. When the company hired a president about a year ago, “we relied on candidate salary expectations to educate us about the market, particularly incentive structures,” says co-founder Bert Jacobs. “The conversations were informative and helped us shape our compensation strategy for the role.”
But that source of strategic info was threatened in August 2016, when Massachusetts became the first state to bar employers from asking job applicants about their previous salaries, because basing a new salary on a prior one perpetuates wage gaps between white men and everyone else. Since then, Delaware, Oregon, Puerto Rico, New York City, Philadelphia, and San Francisco have approved similar laws. “It’s a hidden form of discrimination—employers may think it is reasonable to ask and may not understand the discriminatory effect,” said D.C. congresswoman Eleanor Holmes Norton, who is co-sponsoring a bill to ban the prior-salary question nationwide. At least three other states are considering similar laws as well.
The Massachusetts law goes into effect in 2018, but Life Is Good has already forbidden hiring managers from asking about salaries. The company now bases starting salary offers on external job market data. Even if your state doesn’t have the restriction, you may be affected if you hire staff in states that do. These founders have learned to make smart salary offers while following the rules. —