…So thanks to the HR Policy Association for bringing this one to my attention. You can read the HRPA synopsis here, and the text of the bill itself here, but in summary if this bill is passed it would prohibit employers from seeking salary history information about an applicant for employment (i.e. compensation and benefits).
^The idea here (I think) is that many companies will often base their salary offers to candidates on their prior earnings as opposed to making said offers based on market data and internal equity. Ergo, an employee that makes, say, $62k in a job that pays $75k at the median (and $80k within the organization extending an offer) might see an offer that is closer to the $62k number than something more market competitive because they disclosed what they’re currently working for. And – since most job applicants are afraid to push back when asked to disclose prior salary – those employees that start their careers under market compensation-wise remain perpetually under market as employers continue to lowball them. By putting this law in place, California lawmakers are hoping that they can create a conditions wherein employees and employers are on a more level playing field when going through salary negotiations (e.g. employers seldom disclose the range for a position).
…I have mixed thoughts on this. I will say – based on my own meandering experience and the anecdotes of others – that (once disclosed) prior salary often does play a significant role in driving an employer’s offer(s). This isn’t always the case – I’ve seen candidates offered well above median salary increases to step into a new role because of both market and internal equity considerations – but on balance I would say that job seekers currently paid below market for their KSAs are right to prefer to keep salary history close to the vest if they can.
Conversely, I would also say that – just as employers have the right to refuse to disclose their pay ranges for jobs – job applicants have every right to do the same. An employer that wants to hire a candidate badly enough will extend a job offer with or without a prior salary history. A lot of this is just about knowing what you’re worth and not being afraid to hold your ground.
^Further supporting the position that asking for salary disclosure should be kosher – a candidate’s salary more often than not does communicate something about their level… which makes it a valid data point for employers to request. Seldom is the case that a candidate qualified to a Vice President at a Fortune 100 company only makes, say, $50,000. Instead, more often salary and job title are good indicators of a person’s skills relative to peers in the marketplace.
That said, if we start from the place that employers have an advantage over job seekers in the marketplace as a product of (I) supply/demand and (II) the frequency with which they hire… then a society that wants to even that playing field is heading in the right direction with a policy such as the one sitting with the Governor in California. To be sure, I’m not sure that striving for such a marketplace makes U.S. workers more competitive in a global economy… but I understand the sentiment. Additionally, it’s possible that by implementing a policy like this and (presumably) raising the wage water level, California becomes a more attractive market for top talent and see a ROIC in the form of increased productivity and an improved bottom line over time.
Readers: Do you think this is a good policy? If so, are you wearing your employer/business owner hat or employee hat? I’m not quite ready to stake out a position yet one way or another, but welcome your thoughts in the comments section below.