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Salary History: Yes or No?

OutSolve

Provided by our partner Toni Ahl at EEO Advantage

Whether employers should ask about an applicant’s prior salary history is currently a hot topic of discussion. Some entities, like the City of Louisville, have banned the question on their employment application. Why should former salary history be a banned question? Let’s consider that question.

Equal Pay Day in 2018 was on April 10th. This is the day into the new year that it takes the average woman to make as much money as the average man for the former year. So, a man can work from January through December 2017 for his yearly average wage, but, for a woman to earn the same average salary, it will take her from January through April 10, 2018 in addition to the prior twelve months of 2017.

Many private companies use prior salaries to help establish starting salaries for new employees. If a woman’s salary was lower at her former employer, her starting salary may be established at a salary less than a male comparable due to this former salary disparity. As you can see, the pay disparity will continue throughout the woman’s employment.

Let’s consider an example of using prior salary to establish beginning pay. The company uses a pay band to establish starting salaries. For the position we are considering, the pay ban is $40000.00 to $45000.00. The company considers former salary in establishing the starting salary. Ted, whose former salary was $44000.00, is hired at a starting salary of $45000.00. Gwen, whose former salary was $42000.00, is hired at a starting salary of $43000.00. For both Ted and Gwen, their new starting salaries are $1000.00 more than they had been making. They will be performing duties that require the same skill, effort and responsibility.

The Equal Pay Act states that employees who perform jobs that require the same skill, effort and responsibility should be paid equally unless the employer can show that the pay is based on a factor other than sex. Some of the areas that may be non-discriminatory are education and experience. Employers could articulate any other factor that was not based on sex and one of those used was prior salary history.

Assuming that pay raises at our imaginary company are based on percentage of salary, Gwen will never be paid as much as Ted for equal work. So prior salary history will perpetuate pay disparity.

The Federal government uses pay grades and steps. In most cases, new Federal employees start at the same beginning pay. For example, if a position is a grade 5, step 1, the pay rate is established. There are exceptions to this rule if the newly hired employee has already been employed by the government at a higher pay grade but does not have the requisite experience to be hired in at a higher grade. There is a formula for determining pay rates if this situation occurs and it is used for both male and female employees. The Federal government does not establish salaries using prior pay history. So, you may want to consider if your company wants to gather prior salary history anymore. Is it information you need? If the answer is no, you may want to consider removing the question from your application.

Feel free to reach out to me if you have any questions about the Equal Pay Act. I can be reached at eeoadvantage@gmail.com or (502) 553-7648.

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