Talent Trends: Keeping Yourself Safe When Navigating the Salary Ban

As a leader, you’re always juggling numerous initiatives. From deadlines to budgets, conferences to trade shows, presentations to meetings, your days are filled, even without the time spent hiring. Building your team is a big job. It is, in fact, a job in and of itself, and one you must do on top of your regular responsibilities. We’ve been hearing your suggestions and, as a result, came HS&M’s newest feature, Talent Trends. From Jacobs Management Group’s 30 years in life science executive search, Cari Kraft, President & CEO, will be sharing her experience as you build your team.

I thought it would be only appropriate to begin by keeping you out of harm’s way. One of the critical issues everyone is currently facing is how to address the legal ramifications around candidate compensation. The recent salary history regulations have turned a key part of the hiring process upside down. With a new focus on gender inequality in the workplace, specifically in areas having to do with compensation, these new laws prohibit prospective employers from requesting current salary information from candidates. As such, in many states it is now illegal to ask a candidate’s current salary.

While not a federal, nationwide law, the salary history bans at the state level are growing. Companies of every size are affected. In fact, 8 out of the top 10 American-based companies on our Top 100 Healthcare Companies list are touched by a ban in their headquartered state. Many of our clients have been changing their policies, enacting them nation-wide, and training their employees to protect themselves and limit their liability. Below are our top 5 tips for keeping yourself and your organization safe under these new laws. Please note that I am not a lawyer and in no way am attempting to give you legal advice. I cover the information below to prompt you to delve deeper.

TIPS

1 Know What You Can’t Ask

Make sure you and everyone that interviews a candidate knows what you can and cannot ask. For example, in many states, you can ask a potential employee what his/her salary expectations are, whereas you cannot ask the candidate his/ her current salary. In some states, however, you are allowed to clarify compensation once a candidate voluntarily discloses it. You can see how this can get confusing as the majority of our organizations operate in multiple states. Making sure you are clear about what you can or can’t ask and having a company-wide policy is becoming more and more critical to keeping yourself out of a lawsuit.

2 Have a Plan for Documenting Sensitive Candidate Information

In some states you still can take into consideration a candidate’s compensation, as long as they volunteer it. However you can’t ask them for it. Having a procedure for noting and storing that type of information as an applicant goes through the process is not something that is typically thought through. It is critical to make sure you keep a record that this information was in fact volunteered and not in any way asked for. Our clients use a variety of applicant tracking systems to manage interviewing and hiring and if your system is flexible enough, you can use it as a repository. Make sure you and your team are clear on how and where you will document this information. The best way to keep yourself ahead from any potential of legal issues in the future is to have good, solid documentation.

3 Know What You Must Answer

Many of our clients don’t realize that in some states, cities, and counties, you are required to answer the question, “What is the compensation range for this position?” Make sure you know if you are in one of those locations. And, if so, know what you are going to say so everyone on the interview team gives a cohesive answer. Staying out of the crosshairs is not only about what you don’t do, but also about what you make sure to do. So, make sure everyone on the team has a consistent and clear party line as to how to address this question.

4 Inform Your Offer Process

The salary ban has thrown a new wrinkle into the offer process. In the days before the salary history bans, for the most part, you knew the candidate’s current compensation and were able to take that into consideration when putting together an offer. Now, it’s even harder. How do you make sure your offer is competitive and enticing and that you are not overpaying? At Jacobs Management Group, we developed a new method to help our clients’ navigate the offer landscape, adjusting some of the steps. For the most part, this means moving steps earlier in the process to having qualifying conversations, while not going too quickly to spook candidates. Adjusting the timing of your procedure can make the difference in wasting your time with candidates who are not going to say yes and/ or missing out on top potential candidates.

5 Manage Your Weakest Link

You’re only as strong as your weakest link. There are many people involved in interviewing candidates, some just on the periphery. If one of your interviewers isn’t aware of this current litigious climate and asks a candidate about their compensation history, they could create a risk for you and your entire company. The hiring process brings together different functional groups, seniority levels, and even different companies if you utilize any sort of outside agencies. Make sure you have everyone who will interact with a candidate apprised of the current laws so that you can ensure consistency across the board, lessening any future potential liability.

The above tips were a quick overview to highlight the issues involved in navigating the new salary bans. As you can see, a lot of it is covering the bases about the musts and must-nots in order to protect yourself. If you would like more information or insight, I am happy to connect. We are also putting together a webinar on this topic. You can use this link to connect with Cari Kraft, president and CEO of Jacobs Management Group, an executive search firm specialized in the medical device and pharmaceutical spaces.

GETTING A VISUAL

In addition to our top tips, I thought that it would be helpful to include a visual representation of where salary bans are in effect and the different types of them. Above is a map overviewing the salary bans geographically. As of October 31, 2019, there are 17 state-wide bans and 19 local bans. The image highlights the state and local authorities that have implemented pay-equity laws and salary history bans.

THE VARIETY IN SALARY BANS

Because the salary ban regulations have been enacted at the state, local and county level, the specific laws vary. I thought it might be helpful to include some samples below.

• Employers may not ask, whether on an application or otherwise, about a job applicant’s wage or salary history, including compensation and benefits. Employers also may not conduct searches of publicly available records. Finally, employers may not rely on known salary history information in setting pay.

• Employers may not request applicants’ pay history. If that information is volunteered, employers may only confirm it after a job offer has been made.

• Employers may not ask about an applicants’ pay history until after an offer of employment is extended. Employers also are prohibited from using prior compensation to set pay, except for current employees moving to a new position with the same employer.

• Employers may not request information about previous wages. Only under limited circumstances may they confirm prior pay and rely on that information in setting pay.

• Employers are barred from requesting information about past compensation and benefits until after a job offer is made.

• Employers may not seek pay history. An employer may only confirm pay history if, at the time an offer of employment is made, applicants or current employees respond to the offer by providing pay history to support a wage or salary higher than that offered by the employer.

• Employers may not ask applicants about their salary history and may not rely on known salary histories. Employers also must, upon reasonable request, provide a pay scale for a position for which an applicant has been provided a conditional offer of employment.

• An employer may not seek information about a prospective employee’s pay history until after a job offer has been negotiated.

• Employers are prohibited from asking about applicants’ salary histories, and they cannot rely on that information unless volunteered by the applicant. The law does not apply to internal applicants.

• Employers may not ask about an applicant’s pay history, unless it was voluntarily disclosed.

• Private and public employers are banned from seeking a candidate’s pay history. Even if an employer already has that information or an applicant volunteers it, it still can’t be used in determining a new hire’s pay. The law also requires employers to give applicants pay scale information if they request it.

• Employers may not refuse to hire, interview, promote or employ a job applicant based on the applicant’s decision not to provide pay history.

What does this mean for you? Getting smart about these new regulations and making the appropriate internal adjustments should not affect your ability to add great talent to your team. As you can see though, it is important that you know the laws in your county, city, or state to guard yourself against any legal consequences.