PROVIDING MANAGEMENT AND EXECUTIVE RECRUITING SERVICES

What's the right offer to make

2017-10-24

I am in Chicago this week representing Talent Partners at the MRINetwork global conference and a major topic of discussion at the conference will centre on the laws which have passed which has seen legislation come into place that prohibits (or will prohibt very shortly) interviewers asking interviewees about their current remuneration packages. At present the legislation is limited to 7 regions in the States but the expectation is that this will roll out countrywide. Will this type of legislation make it's way to Ireland? How often are salary/package decisions made on the basis of what the candidate is currently earning as opposed to what he/she should be paid for the role and responsibilities of the position?
 
The article below was published in the IES (Innovative Employee Solutions) and enjoy the read. 
 
 
By Hilary Hager, Corporate Counsel 
 
Employers often make compensation decisions based, at least in part, on an applicant or employee’s past salary history.  This can result in past discriminatory practices (lower compensation because of gender, race, etc.) following an individual across their entire career.  In an effort to combat this problem, an increasing number of state and local governments have passed, or are considering, legislation restricting private sector employers’ ability to ask about salary history.  As of this writing, seven jurisdictions have passed such laws, and similar bills have been proposed or are pending in others. 
 
Although the exact prohibitions and exceptions vary somewhat by jurisdiction, in general the laws prohibit asking an applicant, or their current/former employer, about the applicant’s salary history until after an offer of employment, including compensation, has been extended.  Some extend the inquiry ban to public records searches to find this information.  Most laws make it illegal to consider salary history when screening applicants or making compensation decisions.  It is important to note that the laws generally include an exception to this rule where the applicant voluntarily, and without prompting, discloses past salary history. In addition, employers are usually permitted, with the consent of the applicant, to verify salary history of an applicant once an offer, including compensation, has been made. It will be important for employers to familiarize themselves with the specific provisions applicable in their location.
 
Recently enacted salary bans include:
  • Puerto Rico – Effective March 2017
  • Oregon – Effective October 2017
  • New York City – Effective October 2017
  • Delaware – Effective December 2017
  • Massachusetts – Effective July 2018
  • San Francisco – Effective July 2018
  • Philadelphia – Effective May 2017 but currently not enforced due to pending litigation.
 
Employers face stiff penalties for violating these laws, although some jurisdictions include a grace period following the law’s effective date, during which penalties will not be enforced.  Fines between $1,000 and $5,000 may be imposed for a first offense in Delaware, while San Francisco carries fines of up to $500 per violation. Violations of the New York City ordinance carry a hefty $125,000 fine for unintentional violations and even higher fines for willful violations. In addition, most laws include a private right of action, opening up the possibility of class action lawsuits and punitive damages.
 
Prudent employers operating in the cities or states with a salary history ban should take steps to ensure compliance, including reviewing application forms and providing training to employees involved in the hiring or interviewing process.  Employers who utilize background screening services should use caution as verifications may include salary history.
 
The above article is for informational purposes only and is not intended to be legal advice.  You should consult with an attorney to obtain advice with respect to a particular issue or problem.



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