Banning Salary History: One Step Toward Establishing Pay Equity

Anyone who has ever completed a job application remembers the dreaded portion requesting salary history. It was a trap, really, as potential employers were able to contact the former jobs of their applicants and request that history themselves. So even if you desired more money, it was nearly impossible to request that without contractual pushback. While at face value it felt like the employer’s attempt at gaining leverage in salary negotiations, over the years it has become divisive in perpetuating pay disparity.

For over half a century, discriminatory practices have remained in place, where salaries were significantly lower for certain groups, including women and People of Color (“POC”). The disparity came further into the public’s purview, by way of analytical studies where women and POC were polled about their salaries and lined up beside others, particularly white males. The release of that information was eye-opening, and while measures have been taken to rectify it, there is still a pay gap. Payscale.com’s 2020 report on The State of the Gender Pay Gap found that women are still paid 19% less than men; a step up from 2015’s statistics, where women were paid 26% less. However, Women of Color have been paid far less; per Business Insider, Black women are paid 34% less than men and Hispanic women 42% less. Disparity is cyclical. If nothing changes, then the path that disadvantaged groups are placed upon never changes either. If a particular group of people have already been given that financial head start, it will follow them throughout the duration of their careers. On March 31, 2020 Equal Pay Day reflected that was the date in which women finally earned as much as men through the previous salary year. Banning salary history can cut this trend significantly.

Proponents of this practice have often argued that salary history requests allow them to better gauge what their prospective employee is looking for financially, but when there is a consistent disadvantage amongst specific groups, the cycle continues to no end. That is, perhaps, until now.

Over the last three years, 14 states have opted to ban requests for salary history. In total, 19 states and 21 localities have enacted salary history bans, according to a running list kept by HRDive. The results have led to women seeing an 8% jump in their salaries and Black Americans seeing a 13% increase. The numbers don’t lie.

So, how can these measures promote pay equity? For one, it levels the playing field for all prospective employees. If a company has their floor to ceiling set in place with regards to a particular position’s salary budget, they can apply this to any prospect, presuming that the end result will hover between that floor to ceiling for everyone. There is no bargaining power beyond the confines of the corporate budget, allowing for less room to discriminate. Further, it allows for those disadvantaged groups to eliminate the existing barriers that have prevented them from earning the same as others. If everyone is starting at the same place, there will be greater diversity at the finish line. Lastly, it will offer a company the luxury of transparency. While many Human Resource Departments saw salary history as a way to better understand the person applying, this move will allow the applicant to better understand the company that is hiring. This may not completely eliminate pay disparity, but it is certainly a step in the right direction.