Amazon Bans Salary History Inquiries and More National Companies May Have to Follow

Many states across the nation have actively taken measures to change the disparities in pay among men and women as well as minorities. Global and domestic corporations are starting to do the same, implementing rules to further ensure a fair approach in determining both salaries and raises/promotions.

Amazon is the latest to recognize the realities of this growing nationwide movement for fair and equal pay. In mid-January, Amazon added a new set of mandates to its hiring rulebook endorsing a prohibiting salary history inquiries. Hiring managers are now forbidden to ask applicants about their salary history, their previous benefits packages, and retirement savings plans. Further, any salary history information (as well bonuses, promotions, etc.) cannot be used to determine whether or not to hire a prospective employee.

For Amazon, a company with more than 200 facilities across the U.S., the decision was recognition of a practical reality. With least 13 states implementing new laws in 2018 to bolster pay equity, including bans on salary history, and another 11 states considering passing pay equity-related laws in 2018, it would be challenging to manage multiple hiring practices tailored to specific state laws. As Amazon continues its relentless growth, it makes sense to see the growing regulatory trend towards equal pay and manage it to its advantage, while also courting positive media coverage.

Amazon isn’t the first to recognize this situation. Spurred on by California legislation banning the use of salary history in hiring practices, tech companies headquartered in California, such as Facebook, Cisco and Google, also recognized that they would need to make changes to their hiring practices to comply with state law. They also decided to implement new hiring practices nationally that would ban the use of salary history in the hiring process.

What does this mean for companies with offices and facilities located in multiple states? As more states, regional governments and major municipal governments continue to pass more stringent pay equity laws, salary history prohibitions may soon become the norm. Companies with locations in multiple states and cities should assess their exposure to new pay equity laws to determine if they should change their company-wide hiring policies to adopt practices, such as banning the use of salary history, that are a legislative focus of more state and municipal governments. Such voluntary changes in hiring policies may even help employers’ brand reputations in the process.

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