Bank of America has joined a growing number of major US companies that have decided to stop asking candidates for their salary histories or using that information to set compensation for new hires, in an effort to close gender and racial pay gaps, Bloomberg’s Jordyn Holman reports:
The policy, which takes effect in March, “restricts how we solicit compensation information from candidates during the hiring process,” Sheri Bronstein, the bank’s global head of human resources, said in a memo to employees this week. “We will implement it across the company to help ensure we consider new hires for individual qualifications, roles and performance, rather than how they may have been compensated in the past.”
Bank of America was already required to meet similar rules in states including Massachusetts and California. The bank’s most recent review found that female employees in the U.S. and U.K. are paid on average 99 percent of what male employees earn, after adjusting for factors including role in the organization, experience, work location and performance, according to the memo. Minority employees are also paid on average 99 percent what their non-minority colleagues make, the review found.
These results are identical to those found by Citigroup, one of Bank of America’s chief competitors, in a recent pay survey of its workforce in the US, UK, and Germany. Arjuna Capital, the activist arm of investment firm Baldwin Brothers Inc, had been pressuring both banks to address gender pay gaps by introducing shareholder resolutions that would require them to do so. Arjuna withdrew its proposals after the banks released their pay survey findings.
Wells Fargo, another one of the “big four” US banks, stopped asking candidates for salary histories nationwide last October, when a ban on such inquiries went into effect in New York City. Although these bans are only being enacted at the state and local level, a number of large national employers have decided to abandon them entirely, including tech giants like Amazon, Cisco, Facebook, and Google. These moves reflect the common practice among multi-state employers of tailoring their policies to the most restrictive regulatory environment in with they operate; these companies may also be anticipating that such bans will eventually be enacted in other jurisdictions.
It is important to recognize that the 99 percent pay equity figures found by Bank of America and Citigroup only apply to role-to-role gaps, comparing employees with identical roles, levels of experience, and performance ratings. In the aggregate, male employees still out-earn women at most companies because men make up a majority of senior management (which in turn raises questions about the possible impact of unconscious gender bias on performance evaluations, rewards, and promotions). Unfortunately, these group-to-group gaps based on factors like role, seniority, and experience are much harder to close than role-to-role gaps, as they can’t be addressed with pay adjustments alone.