Cafe Classic: Prejudice Perpetuated by Prior Pay Pattern

Editor's Note: With today's Classic, Jim Brennan reminds us that little is more satisfying to an HR/comp professional exhausted by dealing with the constant ambiguity of human nature than being able to think (but not say) "I told you so!"  Six American states have already enacted bans on requirements that pay history must be disclosed by applicants.  Many other states, provinces, counties and cites plan to follow.  Change is here.  Read, consider and prepare! 

Legislative initiatives to ban questions about past salary during the employment application screening process keep popping up. I've been deluged recently with interview requests from writers seeking pungent quotes for articles on the topic, so it must be time for us to step back into that fray where others are already tussling.

Here are some salient summary points we should kick around before the politicians determine our practices for us.

For Management: Why ask for prior pay history in the recruiting process? For the most effective/efficient screening, of course, to weed out "the obviously unqualified" candidates. Strong prejudice emerges against anyone paid outside the income band acceptable to the hiring manager.

Recruiters suspect that those who earned much less than the expected amount have not risen to an adequate level of proficiency to earn the minimum of this open position's value. At least, that is the quick assumption. Since recruitersare usually under time pressures and expense limits, deluged with piles of applications while totally unqualified to make deep examinations of applicant credentials, they instinctively press the “easy” button. They presume facts not in evidence. Candidates who earned much more than the employer's normal offer rate are expected to become dissatisfied if hired within the appropriate job pay range, whether overqualified or not. Plus, they create pressure to make hiring offers above the normal entry rate, closer to the central position value, thus potentially creating pay compression with senior peers and inviting other invidious internal equity comparisons when word gets out. Lazy logic argues: why ask for trouble you can easily avoid?

For Applicants, a prohibition against demanding salary history would level the competitive playing field. Unfortunately, their equity would come at the cost of inconvenience to those who process the applications. Recruiters and hiring managers would have to work harder, sifting through more candidates to focus on potential deliverables from the performers, rather than seize upon proxy elements like their prior pay level that have no real relationship to their value to this hiring organization. The only thing that would be worse for recruiters would be a requirement to exclude race, gender and age in resumes submitted for screening protocols short of personal interviews.

Society could benefit by the enhanced opportunities for nondiscriminatory hiring and pay equity that would open up if irrelevant factors were prohibited from scrutiny by prospective employers. Then "diamonds in the rough" would be discovered at an unprecedented pace. Job seekers who would have been passed over could rise through the screening process as their knowledge, skills and abilities justify.  For the first time, candidates would be permitted to compete on their merits alone, without regard for the size of their prior paychecks. Compensation professionals could supply more flexibility in job pay classification and entry rates, too, as employers learn the true full range of talent qualified for their work. Hiring offers will become more variable and creative, rather than rigid. It would mean more work but better results for employment reps whose hiring managers who could improve their talent acquisitions.

Historical pay discrimination is perpetuated when past pay sets future pay. Systemic discrimination will continue forever until the apparently neutral practices that have disparate negative impact on protected classes are ended. If applicants were not required to reveal prior salaries, they would be less likely to be unfairly eliminated as candidates.

Prospective employers currently demand past income history from job-seekers while frequently withholding any details about the relevant pay range they offer. Why waste their time and yours? Don't ask what they used to make.  Just tell them the entry rate. Applicants could then freely decide whether to pursue the opportunity or not.

If human resource professionals can't come up with a valid reason for keeping prior pay as a sorting tool, it should be banned as inappropriately prejudicial ... and probably will be.

E. James (Jim) Brennan is an independent compensation advisor with extensive total rewards experience in most industries.  After corporate HR posts and consulting CEO roles, he was Senior Associate of pay surveyor ERI before returning to consulting in 2015. A prolific writer (author of the Performance Management Workbook), speaker and frequent expert witness in reasonable executive compensation court cases, Jim also serves on the Advisory Board of the Compensation and Benefits Review.

Comments

[E. K. Torkornoo]

A prescient and insightful piece.

Jim, thanks again for your prolific, generous, and sage contributions to the practice of compensation, rewards, and beyond.

[EJames Brennan]

Same sentiments right back at you, EK! Your comments are always eloquent and deeply perceptive, except maybe when you exaggerage my halo.