Illegal to Ask about a Candidate’s Compensation?

Talent acquisition professionals get paid to talk turkey with candidates. I am talking about cold, hard cash money. What do you need, what do you feel your skillset is worth, what do you want, what will it take, and where are you at now? Every recruiter I have known is comfortable handling these conversations in a professional manner.

….until now. Or starting in 2018, to be precise. Massachusetts has just passed a law that makes it illegal for recruiters (or hiring managers) to ask a candidate about money until the company makes an offer. Check this article from www.benefitnews.com:

On Aug. 1, 2016, Massachusetts became the first state to bar employers from asking job applicants about their salary history before making a formal job offer that includes compensation. Under the new law, employers may not seek information about an applicant’s salary history from the applicant or his or her current or former employer unless the applicant voluntarily discloses such information or gives the prospective employer written authorization to obtain such information after an offer of employment with compensation terms has been made.

Hey, did I miss something? Has talking to candidates about money been a problem? Why is someone making a federal / state case out of this?

To have efficient hiring processes, it’s super helpful to figure out early what the “seller” is hoping to receive for their skillset. Job seekers get to say what they want to make—that’s ok. Often, candidates also provide their current compensation, understanding that both parties know that it usually takes a 10% bump to make a move—and a lot more than that in some cases. And a lot less in other cases.

A handful of the factors that determine whether someone will take more or less money:

  • Career growth
  • Location—better or worse
  • Better work environment
  • Moving away from a bad boss or to a better one
  • New skill learning opportunity
  • And 67 more reasons

In almost all markets right now, top talent is at a premium. It’s a seller’s market, and based on what the seller needs, their compensation expectations can change. Massachusetts is making that conversation illegal (if asked by the employer).

With all of the information available to candidates, it’s hard to argue that they are at a disadvantage. I understand that there are shady companies in the world who are perfectly happy paying someone below market if they can get away with it. However, the market over time fixes this with higher attrition and lower overall talent working at those firms.

Why is the Commonwealth against having a frank and open conversation about this topic? I am perfectly open to learning more about this. Somebody help me out.

FOT Note: This rant is brought to you by the good folks at OutMatch who like us enough to be an annual sponsor at FOT for all content in our Talent Selection and Employee Development track (and don’t expect that we run any of this by them ahead of time). 

FOT Background Check

RJ Morris
R. J. Morris is based in the STL as the Director of Talent Acquisition and Management for McCarthy Building Companies, a multi-billion dollar national firm. Like many others in the FOT clan, he’s a sports nut who can endlessly draw the parallels between athletes, sports and the talent management game. I know, I know, as if we needed more of that. He has 10 years of practitioner experience leading talent efforts in corporate HR and another 7 years in leadership roles on the agency side, so he gets both sides of the desk. Talk to R.J. via emailLinkedInTwitter...

9 Comments

  1. J E Seely says:

    I had heard it was about achieving gender pay equity – concept being that if the candidate happens to be a woman and reveals her current pay, which based on data is not on par with a male candidate with similar skills/education/experience, she would continue to experience pay inequity by revealing her less-than-equitable current salary if that’s what the employer used to determine the appropriate offer.

    Reply
  2. Marie says:

    Yeah, I think you did miss something. MA did this as part of an effort to reduce the wage gap. They picked this policy because research tells us that women lose out during the negotiation process. The idea is to remove the intentional and unintentional biases that most of us have by focusing on what the work is worth. If a woman us underpaid early in her career the effects over a lifetime can be enormous if employers constantly base her salary off what she has previously earned.

    This NYT article has some helpful links if you want to learn more about the thinking behind this bill, and why a Republican governor and the Chamber of Commerce both supported it: http://www.nytimes.com/2016/08/03/business/dealbook/wage-gap-massachusetts-law-salary-history.html?_r=0

    I think you should review the working of the legislation more carefully. You write that “To have efficient hiring processes, it’s super helpful to figure out early what the “seller” is hoping to receive for their skill set.” The law says you can’t ask about compensation history. That is separate and apart from salary expectations, which are very much still legal to ask about and discuss.

    Reply
  3. Sara says:

    We have an office in Boston, so was notified of the ruling–it’s odd. However, you can ask a candidate about salary expectations or you can share what you have scoped for comp for the position–so you’re not getting all the way through an interview process/everyone falling in love with each other, only to discover that you can’t afford each other!

    Reply
  4. David Hite says:

    interesting post. Not sure but if you think about it job seekers should be able to keep that confidential so they can negotiate the best for a better salary, however they could make up #’s to get way higher salaries, I used to make a practice to tell them my clients check w-2’s, but in 12 years of recruiting i know they never have. Good points to consider anyway.

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  5. jasen says:

    @Marie – except, if you actually read the tons and tons of research on the supposed wage gap, it doesn’t exist when you compare like occupations, with similar experience. What little gap that does exist, is entirely based on a choice to work fewer overall hours. As a matter of fact, in STEM fields, those same reports show that women on average, out-earn their male counterparts before they have babies.

    The fact that we’re still beating this drum when the current administrations own data shows the above information, just proves that if you repeat something enough, everyone will believe it. Even if it is flat out false. Like most social engineering legislation, this will most likely have numerous adverse and unintended consequences that cause more harm than good.

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  6. Michele says:

    As Marie pointed out, this law does nothing to prevent discussion of potential compensation for whatever position an employer might be considering a candidate for. Both parties can have candid conversations about expectations and pay scales from day 1. What it does do is prevent employers from basing whatever offer they might make a candidate on what their previous employer paid them. This is right and good, given the intense wage stagnation that persists across industries, across the nation, even in this “seller’s market.” It forces employers to determine what the WORK is worth in as objective a manner as possible, rather than using a candidates current or most recent salary as the floor and adding 5% as a dangling carrot.

    Reply
  7. Josh says:

    Current/past salary is not usually a good anchor to use in setting someone’s new salary. It can perpetuate years of under or over payment. The law doesn’t take much away from open conversations about salary. An employer should know how much value the position and the candidate can provide and offer a fair wage with those considerations and communicate the justification for that amount. Anchoring a new salary as a percentage increase from a past salary is lazy.

    Reply
  8. lurker says:

    Shady companies that pay below market are WAY more prevalent than the article indicates. Estimating current worth against past wage trajectory is asinine, and every company I’ve ever worked for did (or still does) this. No law will ever stop recruiters from asking about a prospect’s ideal comp/benefits package and be able to defend that later by referring to “total rewards” outside of cash salary.

    Reply
  9. Hank Reardon says:

    Having been a recruiter for over a decade, the champion of the frank discussion, and also having seen mfg “fluidity” during the 08-09 major turndown; as an excellent marker – YES, most people are paid what they’re worth. I’ve always had very candid conversations with all candidates on their market strength. Absolutely I’ve told many they’re underpaid and conversely I’ve told several (and those seeming ‘only’ money motivated too) that against the breadth they’re quite highly compensated and shouldn’t even consider a change.

    Yes, an excellent premise is, many will consider a change of +10% to be a good rule. Absolutely some can get increases significantly more than that (I’ve seen 35-40 on rare occasion). Have I ever had a client company appear to favor a candidate because they could get them on the cheap? Hardly, client companies jump through hoops and crawl over broken glass to get the best candidate.

    Compensation is never the only key for the company – though certainly there are times where they have a hard and fixed ceiling [rarely] . A GOOD Recruiter discusses all the things of importance to the candidate and to the company. If a candidate, or a company, can’t communicate motivations for making a change I’m running away as if my hair is on fire. Poorly defined cultures and job descriptions or/and, poorly defined candidates create heartache for all parties and, in particular, a weak bank account for the recruiter.

    Remember, you define yourself by what you say ‘no’ to – and, it’s okay to say.

    Reply

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