Major US companies are continuing to drop the practice of asking job candidates for their salary histories nationwide in response to the proliferation of state and local laws barring them from doing so. The Progressive Corporation plans to add more than 7,500 new hires to its workforce in 2018, and won’t be asking any of them about their prior salaries as part of the process of setting compensation, the company announced in a press release last week:
Progressive recently decided it would no longer ask applicants about their salary history. “We’ve always based our pay on market research,” [Chief Human Resources Officer Lori] Niederst said. “We hope this change will give candidates who apply for our jobs confidence that they will be paid based on what they bring to Progressive, regardless of whether their previous employers paid them fairly.”
The Ohio-based automobile and homeowner’s insurance provider currently employs more than 33,000 people in almost 400 offices throughout the US. The company plans to hire extensively this year in Austin, Cleveland, Colorado Springs, Phoenix, Sacramento, and Tampa. Only one of these locations (Sacramento, California) is subject to a law prohibiting employers from inquiring about candidates’ salary histories, but Progressive is dropping these inquiries everywhere.
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.
Amazon has prohibited its hiring managers from asking job candidates in the US about their previous salaries, Caroline O’Donovan reports at BuzzFeed, citing a post on an internal company message board:
According to Amazon’s message, which was posted Tuesday, hiring managers and recruiters can no longer “directly or indirectly ask candidates about their current or prior base pay, bonus, equity compensation, variable pay, or benefits” or “use salary history information as a factor in determining whether or not to offer employment and what compensation to offer a candidates.”
The instructions also explicitly ban the use of tools like LinkedIn Recruiter to estimate or otherwise ascertain an individual’s prior salary. According to an Amazon spokesperson, these rules were shared with all Amazon recruiters in the US, and apply equally to salaried employees like software engineers and hourly workers like call center employees.
This change comes in response to a wave of state and local laws banning salary history inquiries in the hiring process, including in California, Delaware, Massachusetts and Oregon, as well as New York City. California’s salary history ban, which came into effect at the beginning of this year, could have a particularly significant impact as that state is home to many major employers, including the tech giants of Silicon Valley. Facebook and Cisco have both announced that they will stop asking about salary histories, not just in California but throughout the US, while Google has already abandoned them nationwide.
Even as the Trump administration rolled back numerous Obama-era regulations at the federal level and took more employer-friendly stances on a number of hot-button labor issues, 2017 also witnessed the continued proliferation of new laws and regulations in states and localities, particularly those whose legislatures are dominated by Democrats. Many of these policy changes came into force on January 1, while others will become effective later in 2018, meaning countless US organizations will have to adjust to a new and more complex regulatory landscape this year.
Minimum Wages Rise for Millions of Workers
To begin with, minimum wages rose on Monday in 18 states, including several that passed referenda to that effect in 2016. Arizona, California, Colorado, Hawaii, Maine, Michigan, New York, Rhode Island, Vermont, and Washington saw increases ranging from 35¢ to $1.00 per hour due to legislative or ballot measures, while the pay floors in Alaska, Florida, Minnesota, Missouri, Montana, New Jersey, Ohio, and South Dakota, which are pegged to inflation, rose automatically. The left-leaning Economic Policy Institute calculates that 4.5 million employees in total will see their pay increase thanks to these measures—though opponents of minimum wage hikes would argue that some of these employees will be laid off as their employers can no longer afford to pay them at the new rate.
California Keeps on Being California
With its huge labor market, diverse economy, and liberal government, California is a longstanding laboratory of progressive legislation, which serves as a bellwether for emerging regulatory trends and has an impact beyond the state’s borders as multi-state employers often opt to comply with California’s stricter rules nationwide for simplicity’s sake. A number of new laws came into effect in the Golden State this week that employers there need to be aware of. Mark S. Spring, a partner at Carothers DiSante & Freudenberger LLP, breaks down all of these changes at TLNT. Here are the changes in brief:
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.
California Governor Jerry Brown on Thursday signed a bill that will prohibit all public and private employers in the state from asking job candidates about their prior salaries and require them to give candidates a pay range for the role to which they are applying upon request. The new law, which is meant to help close the gender pay gap, takes effect January 1, SF Gate reports:
Last year, the state passed a weaker law that said prior compensation, by itself, cannot justify any disparity in compensation. The new bill goes further by prohibiting employers, “orally or in writing, personally or through an agent,” from asking about an applicant’s previous pay. However, if the applicant “voluntarily and without prompting” provides this information, the employer may use it “in determining the salary for that applicant.” …
The bill was one of nine Brown signed Wednesday designed to help women and children. One of them, SB63, will let mothers and fathers working for employers with 20 to 49 employees take 12 weeks of unpaid, job-protected leave to care for a newborn or newly adopted child or foster child. Businesses with 50 or more workers already had to provide this. The leave can be taken in two-week increments.
With this bill, California joins Delaware, Massachusetts and Oregon as states with bans on salary histories coming into effect within the coming year. The governor of Illinois vetoed a similar ban in August, but the trend among liberal-leaning states is otherwise unmistakeable. Salary history bans have also been enacted at the local level in places like New York City and San Francisco, while a version in Philadelphia has been held pending a court challenge.
A bill recently passed by both houses of the California state legislature and now awaiting the signature of Governor Jerry Brown would, with certain limited exceptions, prohibit California employers from voluntarily allowing Immigration and Customs Enforcement (ICE) agents onsite to conduct immigration inspections or to access employee records without a warrant or court order. Supporters of the bill describe it as a means of protecting California’s immigrant workers from abuse by federal authorities and of resisting President Donald Trump’s immigration policies, which have resulted in a spike in ICE raids and allegations of rights violations. SHRM’s Lisa Nagele-Piazza has the details on the bill:
Among other things, A.B. 450 would require employers to:
- Obtain warrants and subpoenas from federal immigration agents before granting them access to nonpublic areas of the worksite or permitting them to inspect certain employee records.
- Notify workers and their labor unions about an ICE enforcement activity within 72 hours of receiving notice of the inspection.
- Provide each current affected employee and the employee’s authorized representative with the results of an inspection within 72 hours of receiving such information from ICE.
- Pay penalties of between $2,000 and $10,000 for violations.
Currently, employers may voluntarily comply with federal agents’ requests to access the worksite during an immigration-related investigation.
If Brown signs the bill, organizations in the state will have to train their employees not to voluntarily consent to ICE actions, among other compliance challenges.