Asking candidates about their current wages and the components of their current compensation plan has always been a key part of the screening process for executive search firms and employers.
New legislation passed in New York City, Philadelphia, Massachusetts, Pittsburg, Delaware, New Orleans Puerto Rico and the states of Oregon and California has banned employers and search firms from asking job candidates about their pay history during the hiring process.Some of the locations have only banned public employers, while others have banned both private and public employers. The reason for the new legislation is to eliminate discrimination based on gender or ethnic background.
While all of the recent pay inquiry laws have the same goal of eliminating the wage gap, different states and municipalities have attempted to achieve that goal through various means. Some of the laws vary considerably in scope and penalties and therefore make compliance in different locations challenging for employers. Violations of the law in New York City can result in penalties ranging from $125,000 to $250,000 for a “willful, wanton or malicious act”.
Our suggested solutions:
1) Remove the salary question from the job application completely both on line and on paper.
2) Whoever is involved in the hiring process at your firm and the external recruiters must be trained on the new requirements. We suggest getting all employees involved in the hiring process to sign off on those areas in the handbook and getting your outside recruiters to sign a letter indicating that they will comply with the governing laws of that jurisdiction.
3) All communications should be documented in writing to avoid potential disputes.
4) Employers should have written hiring polices in their employee handbook and forms that comply with the local, state and federal laws. We suggest using your outside counsel to verify that your policies and forms comply with the federal, state and local municipality laws.
This is a growing trend that we feel will expand throughout the United States.
It should be noted however that employers can ask candidates about their compensation expectations for the position and after an employment offer has been made and the compensation terms have been defined, the law allows for confirmation of their past salary.
If you have any additional questions about the issues outlined above or anything else related to the hiring of employees, please feel free to contact: Michael F. Rosenblatt, President, FON Search at 212-971-0033 or firstname.lastname@example.org.