Kansas City, Missouri joins a host of other cities and states to pass an ordinance prohibiting employers from inquiring about past salary history when recruiting. The ordinance, which goes into effect on October 31, 2019, will cover any business in the city with 6 or more employees.
The ordinance specifies where salary history inquiries are banned throughout the hiring process. As of the effective date, employers may not:
Salary history can include past wages, benefits and other compensation. It doesn’t include “objective measures of the applicant’s productivity.” That could include revenue they generated, sales or other production measurements.
In addition to not asking for salary history on applications or in person, employers will also be prohibited from searching for the candidate’s salary history in public records or online. While employers may conduct background checks, salary may not be part of the information disclosed. If any salary history is inadvertently obtained, they may not consider or rely on it when making an employment determination.
The Kansas City ordinance is the latest example of a municipality imposing a so-called salary history ban with the goal of making compensation equitable across genders and ethnicities.
Often, a job seeker will voluntarily offer their salary history. While employers can’t stop that from happening, they may not ask or encourage candidates to volunteer the information. If it does come up, they’ll be required to treat it as any other inadvertently obtained information: don’t use or rely on it when making an employment decision.
One of the aims of salary history bans is to promote gender pay equity. With women traditionally earning less than men on an hourly basis, the bans can help reach parity.
Another issue is historic impact. Employers often find a bargain when hiring. For example, their job pays $12.00 an hour: an applicant’s salary history shows they were making $10.00 per hour in their last position. An offer of $11.00 per hour is a raise for the job seeker and a saving for the employer – everyone wins.
But that practice is exactly what salary ban laws seek to eliminate. The same candidate, moving up the ladder will always be at the lower end of the scale with that employer. If their next company bases wages on the same criteria, lower wages will follow them throughout their employed life. The impact can create wage inequity for years or decades.
Recruiters get frustrated when they interview a desirable candidate only to find they’re outside the candidate’s desired salary range. When a candidate’s past salary was significantly higher than what the employer is willing to pay, many businesses eliminated the application out of hand.
Conventional wisdom held applicants willing to take a pay cut are prone to job hop. But many people will accept a lower salary in exchange for less pressure and a better work/life balance. Rethinking these applicants, and inquiring why they’re willing to downsize, might net a top new hire who can hit the ground running.
Employers under the new rule are allowed to discuss aspects of compensation with candidates like unvested equity or deferred compensation. Other categories may be added.
Small business, with 5 or fewer staff members will not have to comply with the law. Also excluded are internal applicants who request a transfer or promotion. Another category exempt from the salary history ban are those where a collective bargaining agreement is in place. Former employees, who are rehired within 5 years of their last day on the job, are also exempt if the business holds records of the employee’s past compensation.
The ordinance in Kansas City, as in other locations, is aimed at creating wage parity among workers. By reducing the amount of information employers seek at the beginning of the recruitment process, they hope to generate more equity when new employees are hired and throughout their careers.
Many companies affected by these laws, and some that aren’t, have shifted their hiring practices to eliminate requesting salary history during the application process. They’ve switched to publishing the salary range for any open position. When candidates know up front what the rate of pay will be they can apply if it’s in their range. If not they can look for another opportunity. That should save time for recruiters and job seekers as it promotes pay equity for women and others throughout their work lifetime.
This article is intended only for informational purposes. It is not a substitute for legal consultation. While we attempt to keep the information covered timely and accurate, laws and regulations are subject to change.