Will Bans on Salary History Questions Equalize Pay Gap?
By Beth Florkowski of Fausone Bohn, LLP posted in Business on Tuesday, November 28, 2017.
Jim Fausone, Esq.
The pay gap between male and female has been a controversial subject between many for years. Several states, cities, and counties have passed new legislation purportedly designed to bridge the gap. Asking potential job candidates about their salary history in previous positions has been a standard way to set new salaries for many companies. New legislation looks to bar companies from asking that question so as not to perpetuate salary disparity.
While the goal of these new measures is to close the gap between genders, not everyone is convinced it will work. The idea is the new legislation will prevent employers from setting salaries based on previous pay. This way, females that have been negatively impacted by discriminatory salaries in the past, are not subject to unfair pay for the remainder of their careers.
Unfortunately, these new measures may not change much in the big picture. A study conducted by Harvard Business Review indicates that a woman who does not report her previous salary, on average, was offered 1.8% less. While a male who doesn’t report was offered 1.2% more. These results illustrate that the new legislation is actually counter-intuitive of its intended purpose. One reason this occurs could be that a woman who does not disclose her salary history may induce the assumption that she makes less, resulting in a lower offer. On the flip side, non-disclosure when prompted may cause the employer to react negatively, so legislation that prevents the question from being asked could benefit her.
Many large companies feel that they already have significant policies in place to avoid salary differences, making the new legislation a non-factor. The impact is much more likely to be seen in smaller businesses. These employers are often much less policy-driven, and more negotiation takes place allowing room for these changes to be noticed.