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A Step Forward
Why Your Salary History Is Becoming Irrelevant
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Natalia Marulanda,
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Philadelphia is among the U.S. cities most rich in history, and in January of this year, it made history once again by becoming the first city in the nation to bar employers from asking potential hires to provide their salary history. The move was applauded by supporters of gender equality concerned about the wage gap afflicting women as a long overdue measure that will help to close the gender pay gap that currently leaves women earning 80 cents for every dollar earned by a man.

While the Equal Pay Act prohibits employers from discriminating on the basis of sex by paying employees less than those of the opposite sex for equal work on jobs requiring “equal skill, effort, and responsibility,” women often find themselves disadvantaged in terms of a wage gap when employers use their past salary history to determine compensation. This is because it does not allow the opportunity to correct for any past discrimination or gender bias, and as a result, women continue to earn less than their male counterparts. The cycle is perpetuated, and the gap continues to widen over time.

Of course, the gender wage gap is a complex topic (see our other writings about the gender wage gap and how to close it) with many factors going into what someone earns. Factors such as hours spent working, experience level, education and geography, among other things impact the average wage of men versus women in the United States. However, even after controlling and adjusting for all these factors, labor economists have tended to find a persistent small wage gap between the earnings of men and women in the labor force.

Last year, Massachusetts became the first state to enact legislation attempting to make salary history irrelevant by banning employers from requiring job applicants to provide their salary history before receiving a formal job offer. California followed suit, prohibiting employers from relying on an employee’s salary history to justify pay discrepancies.

Since Philadelphia enacted its more far-reaching legislation earlier this year, other cities have taken note. Most recently, the New York City Council approved a bill in April 2017 signed into law by New York City Mayor Bill de Blasio, making it unlawful for employers to ask prospective employees about salary history. It will also prohibit employers from asking a prospective employer’s current or former employer about his or her salary history, as well as prohibit them from conducting public searches for salary history and related information.

City councils in New Jersey and Pittsburgh have introduced similar salary history bans. Washington D.C. is currently considering a bill requiring employers to publish salary ranges for open positions, and Congresswoman Eleanor Holmes Norton has proposed a federal ban on employers ability to ask for salary history.

This past March, Puerto Rico passed the “Puerto Rico Equal Pay Act” prohibiting employers from inquiring about past salary history and forbidding them from discussing salaries among employees or applicants.

Of course, there are exceptions. While an employer may be prohibited from asking for and relying solely on salary history to set wages, they may take it into consideration if an a prospective employee knowingly and willingly volunteers the information. As such, it’s important that job seekers are careful about what they reveal during the dreaded salary negotiations.

Moreover, pay discrimination can still occur in a variety of other ways. For example, promotions can be distributed unevenly or pay raises or bonuses paid out differently based on gender, race or sexual orientation. And just because potential employers are not allowed to ask about your current salary, salary history or previous salary doesn't mean of course that they won't or can't ask a job applicant about salary expectations or salary requirements during the job application process. 

Overall, this is great news for women and a step in the right direction, since at the current rate of progress, the gender wage gap will not be closed for another 170 years. By setting compensation based on the demands of the job and qualifications of the applicant, women will be one step closer to achieving pay equity. Pay disparity between men and women is a complex and controversial topic but pay discrimination will become less entrenched if the past is not as easily going to follow a female job applicant who has historically made less than a male counterpart in terms of annual salary.

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Natalia Marulanda is a former practicing attorney who currently works on women's initiatives at a law firm New York City. She also runs The Girl Power Code, a blog dedicated to empowering women in the workplace and in their daily lives.

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