Asking job applicants about salary history merits consideration of legal risks

Posted by Charles Middleton on 06/06/2017

Q: As part of the hiring process, many employers ask job applicants about their salary history. Is there anything wrong with that?

A: Prior salary history is a traditional question on job applications and interviews. Curiosity about how much pay it may take to hire a candidate is natural for an employer. Until recently, employers likely would not have thought twice about asking applicants the question, “What did you make at your last job?” But recent laws in some states and cities, as well as a recent court case, require employers to consider whether it's a good practice to ask about prior pay history.

Q: What are the recent laws on asking applicants about their pay history?

A: Several states and cities have passed laws to prohibit an employer from asking a job applicant to disclose pay history until after a job offer is made. The states and cities in which such laws took effect this past year include Massachusetts, New York, New York City, Philadelphia, New Orleans and Pittsburgh. Several laws impose fines on employers for violations. Some include potential jail time for repeat offenses. At least 21 other states, but not Oklahoma yet, are considering similar legislation. The ordinance in Philadelphia was stayed due to a legal challenge filed by the chamber of commerce in Philadelphia.

Q: Why this new interest from lawmakers in prohibiting employers from asking applicants about salary history?

A: A number of lawmakers and commentators have expressed the view that an individual's prior salary history continues the cycle of pay inequality. Historically, women have been paid less than men for the same work. Asking a woman applicant about her pay history often results in the employer's pay decision being influenced by what the woman earned in her previous job, rather than pay being set based on market factors, such as job duties, the desirability of the position, the number of qualified applicants and the broader job market.

Q: Have courts considered the issue of whether pay history is a legitimate basis for setting compensation for employees?

A: Recently, the Ninth Circuit Court of Appeals held that an employer's policy to set new employees' pay at 5 percent more than their prior pay could be legal under the Equal Pay Act if the policy was reasonably used in light of the employer's stated business reasons. In that particular case, the employer's policy resulted in the pay of the plaintiff, a woman, being lower than that of all the men in the same job. The employer, a California county, offered several business reasons for its policy, including that the policy was objective and avoided subjective opinions about a new employee's value, and that the policy was a judicious use of taxpayer monies. The case was sent back to the lower court to make this determination.

Q: Have any courts with jurisdiction over Oklahoma considered prior pay history?

A: The 10th Circuit Court of Appeals, which has jurisdiction over Oklahoma, ruled in Riser v. QEP Energy ... that an individual's former salary can be considered in determining whether pay disparity is based on a factor other than sex, and thus not a violation of the Equal Pay Act. However, the 10th Circuit added that an employer may not rely solely upon a prior salary to justify a pay disparity.

Q: With this attention to pay history, should employers continue to ask applicants about their prior pay?

A: Asking questions about pay history has legal risks and consequences. A better approach would be to have a compensation system based on market factors such as the duties of the job, the desirability of the job and the broader job market.


Published The Oklahoman, June 6, 2017