“What is your current salary?” “Please include your salary history in your cover letter.” “Error: Please fill in all fields before hitting enter.”
If you’ve applied for a job recently, you’ll recommend the above statement. Companies require you to disclose your salary before they’ll consider you as a candidate. As I’ve said for a long time, this is an inappropriate question. You shouldn’t be offering salaries based on what someone else paid you; You should be paying people based on their value to your company.
It seems Massachusetts reads my column because they’ve just passed legislation that bans employers from asking about salary history until after they’ve made a job offer that includes the compensation package.
Now, this is a bit extreme, as legislation comes with a stick instead of a carrot. Implementing this will be expensive, as companies have to change forms and computer programs, and many people will undoubtedly be caught off guard, as screening for salary is a common recruitment practice. Recruiters often start out conversations with people by asking about their current salary. It’s not illogical–why pursue someone when the salary you’re offering is $10,000 less than the person’s current salary. People won’t want to leave their current jobs for less money.
The purpose of this law is to help combat perceived pay inequity. Basing current salaries on previous salaries perpetuate salary imbalances that might have begun 20 years, or more, previously. Attorney Amanda Baer, from Mirick O’Connell’s Labor, Employment and Employee Benefits Group, explained the technical aspects of the new law. While the thing people will notice the most is the prohibition against nosey pay questions, the real teeth are in the pay equality portions.
The Equal Pay Act prohibits employers from discriminating on the basis of gender in the payment of wages (including benefits and other compensation). Specifically, employers cannot pay an employee of one gender less than employees of a different gender for “comparable work,” unless the variation is due to (a) seniority; (b) merit; (c) a system that measures earnings by quantity or quality of sales/production; (d) geographic location; (e) relevant education, training, or experience; or (f) travel. The term “comparable work” is broadly defined in the act to mean work that is “substantially similar” in that it requires similar skill, effort and responsibilities and performed under similar working conditions. The definition is easy enough to recite, but in practice it will likely be hard to apply when it is not clear-cut that work is “substantially similar.” For example, does a company’s Director of Marketing perform substantially similar work to a Director of Operations? If employers decide that the work is not comparable, they will need to be prepared to back up that reasoning in Court – and use the same criteria for other comparisons – if either employee brings a suit. I expect that Massachusetts courts will interpret the term and develop a factorial analysis that will help employers in the future.
This is actually a lot more complex than it seems. Declaring jobs as substantially similar can result in some pretty funny looking things. For instance, a few years ago, McGill University, declared administrative assistants and grounds keepers to be of the same value, and hence deserving of the same salary. These jobs have nothing more in common than they are both entry level jobs.
As Baer says, the courts will have to tackle just what those things mean.
Will other states follow suit? Well, companies with offices in Massachusetts and other states would be wise to implement the policy company wide, as to be sure that they don’t run into problems. Other states may follow when they see how this new law works out. It doesn’t go into effect until January 1, 2018, so MA companies have time to prepare, and other states have time to think about it.
If you want to avoid keeping up with all the complex, pending and current employment laws, contact Personnel Staffing, Inc. for all your staffing needs.