Employers Unsure of Salary-History Bans

When it comes to achieving pay equity in the workplace, employers apparently aren’t sold.
By: | November 22, 2017 • 3 min read
Pink and blue figures on different coin stacks. Concept for gender pay gap.

When it comes to achieving pay equity in the workplace, employers apparently aren’t sold on the idea that banning salary-history questions from the interview process will be effective in achieving that goal.

A new survey by the Hay Group division of Korn Ferry shows that 65 percent of executives at 108 companies believe their organizations will be affected by new legislation aimed at closing pay gaps for women and other underserved populations. However, the majority of executives polled (65 percent) believe that the law will not, or only to a small extent, actually improve the gender pay equity situation in their organization.

What is clear is that hundreds of thousands of employers will need to modify their talent screening and hiring processes, Korn Ferry said in a statement announcing the survey’s results.

“Organizations have a great deal to gain by implementing a strategy and process aimed at improving the overall fairness and transparency of their reward and talent management programs,” said Bob Wesselkamper, Global Head of Rewards and Benefits Solutions, Korn Ferry Hay Group. “This can help organizations create an employee value proposition that positions the company as a place where everyone can build careers and thrive.”

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In addition, hiring situations must be handled carefully as companies that violate the new rules can face substantial fines, the consultancy notes:

“As a result of this legislation, many employers will need to seek out better market data and conduct more rigorous analyses to determine what a job should pay versus relying on the crutch of a candidate’s compensation history,” said Tom McMullen, Senior Client Partner in Korn Ferry Hay Group’s Reward and Benefits group. “Organizations need to ensure they have an effective job evaluation process that provides the right criteria and credibility for assessing the size of jobs.”

Jonathan Segal, an employment lawyer based in Philadelphia, told the Los Angeles Times the bans could be particularly relevant for older workers. Someone who has been working for more years and may be looking to scale back to a less demanding job — or workers eager to get back into the workforce after being out of a job and willing to work for less — could be subject to implicit bias when asked about their past pay, he said.

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