Michigan’s Preemption of Salary History Bans Bucks the Trend, but Won’t Reverse It

Michigan’s Preemption of Salary History Bans Bucks the Trend, but Won’t Reverse It

Last week, Michigan Governor Rick Snyder signed into law a bill preempting local governments within the state from regulating the questions employers are allowed to ask candidates during job interviews. The broad anti-regulatory measure is aimed specifically at restricting local ordinances prohibiting inquiries about candidates’ salary histories, Jackson Lewis attorneys Stacey A. Bastone and K. Joy Chin observe at the firm’s Pay Equity Advisor blog, reinforcing a 2015 law that prohibited local administrations from banning these questions on job applications:

At the time of the bill’s signing, no municipality in the state had proposed an ordinance restricting pre-employment inquiries into salary history. Proponents of the bill contend that asking about an applicant’s past or current salary is a standard business practice and assists employers in budgeting. Opponents argue that soliciting salary history can perpetuate discriminatory pay gaps. …

Wisconsin’s legislature is also poised to pass similar legislation, they note, which Governor Scott Walker is expected to sign. Michigan and Wisconsin here are employing a legislative tactic that has become increasingly common in the past year among states with conservative governments to prevent their more liberal cities from implementing their own, more progressive employment regulations. At the same time, other, more liberal states are pursuing more employee-friendly labor regulations, including higher minimum wages, paid family leave and sick leave mandates, restrictions on the use of non-compete agreements, and even protections for employees who use marijuana in states where the drug has been legalized.

When it comes to salary histories, these midwestern states with Republican governors are going against the prevailing trend. Bans on these inquiries have been passed in California, Delaware, Massachusetts, Oregon, Puerto Rico, New York’s Albany County, New York City, and San Francisco, while 14 other states are considering them.

The polarized politics around employment regulation has increased variability and uncertainty for employers who do business in multiple states, confronting them with a patchwork of regulations. As federal regulations stall or are rolled back and as state regulations diverge, large employers have been put in the position of effectively driving social policy in the US through their own HR policies.

In the case of salary histories, the preemption laws in Michigan and Wisconsin are unlikely to turn the tide. Although a recent survey found that most US employers, particular smaller organizations, still use salary histories to assess candidates’ salary expectations and determine salary offers, big companies are moving away from this practice. In the past three months, employers like Progressive, Amazon, and Bank of America have announced that they were abandoning salary history inquiries nationwide, while the background-check firm HireRight no longer includes questions about salary history among its default options.

This is partly in response to the proliferation of bans in major markets like California, Massachusetts, and New York City, but also to labor market demands for more fair, transparent, and rational pay practices. The way these companies see it, omitting salary history questions from their recruiting process ensures they are paying employees fairly based on what they are contributing and avoiding any gender-based wage discrimination, which carries a greater risk than ever before of damaging an organization’s reputation and employer brand.

Furthermore, from a practical perspective, these companies strive for simplicity and ease in their business practices and don’t want to bother with the complexity of asking different questions in different places. For major multi-state employers, the path of least resistance on the matter of salary histories is simply not to ask them anywhere.