State and Local Salary History Bans Having Ripple Effects

State and Local Salary History Bans Having Ripple Effects

When Massachusetts became the first US state to bar employers from asking candidates for their salary histories in an amendment to the Bay State’s equal pay law last year, some observers predicted that it would be the first of many to do so. Sure enough, others have followed suit this year, including New York City in April and California in October, along with Delaware and Oregon. Democrats in the House of Representatives even proposed a bill last September to ban salary history inquiries nationwide, which they introduced in May in response to a federal court ruling that gender pay gaps based on salary history were not discriminatory.

That bill has virtually no hope of becoming law in the current Congress, but inspiring federal legislation is not the only way that these state and local bans can have nationwide impacts. California, Massachusetts, and New York City represent large labor and consumer markets where most nationwide businesses have a footprint, and to keep things simple, many organizations base their employment policies around the requirements of the most tightly regulated jurisdiction in which they operate. California law is well understood to affect national employment practices in this way: Because it is the most populous state and has some of the most stringent employment laws and regulations in the country, multi-state and multinational employers will often set their US policies to meet California’s standards rather than draft different policies for employees in different states.

New York City’s salary history ban is now beginning to have the same effect.

Martin Berman-Gorvine writes at Bloomberg BNA that the major national bank Wells Fargo has not asked US employees about their salary histories since that ban went into effect on October 31. An executive at the bank said the company was committed to meeting the requirements of New York and other locales where salary history bans are pending or already effective. Wells Fargo operates in 39 states, most of which don’t ban these questions, but its policy of not asking them applies nationwide. The California-based background-check firm HireRight, meanwhile, has turned off the salary history question on its platform for clients throughout the US, Berman-Gorvine adds. Clients can have it turned back on upon request, but only 1 percent have. By changing the default setting to “don’t ask,” HireRight is nudging all of its US clients away from asking about salary histories, whether their state allows it or not.

These moves show that major companies and recruitment service providers are anticipating that the days of asking US candidates for salary histories are drawing to a close. In the era of Glassdoor, pay transparency, and heightened awareness of the structural biases that hold down women’s pay and stunt their advancement in the workplace, employers like Wells Fargo are recognizing the need for a better, fairer way of negotiating and setting compensation.