Salary negotiations can be challenging for both hiring managers and candidates. Finding the right balance between what a job is worth in the marketplace, departmental budget allocations, and candidate desires can be difficult. A new law in Massachusetts aims to eliminate one common factor in the salary negotiation process: candidate salary history.
Established with the goal of closing the gender pay gap, the new law, which will take effect July 1, 2018, requires employers to inform applicants of a compensation package that is based on the worth of the role to the company, not the applicant’s previous salary history, which is typically lower for women and minorities. It also addresses the issue of pay secrecy, allowing employees to freely discuss compensation with coworkers without fear of punishment from employers.
Wage disparity between men and women working the same jobs is an issue that has garnered a lot of attention in recent times. According to the United States Census Bureau, women who work full time in the U.S. earn 79 cents to every dollar paid to their male counterparts. This adds up to $10,762 of lost wages in a year. By removing the salary history requirement and encouraging wage transparency, the Massachusetts law promotes fair pay for women and ensures that they don’t get trapped in lower wage cycles for the rest of their careers.
Here’s an excerpt from The New York Times article on the new legislation:
In a groundbreaking effort to close the wage gap between men and women, Massachusetts has become the first state to bar employers from asking about applicants’ salaries before offering them a job.
The new law will require hiring managers to state a compensation figure upfront — based on what an applicant’s worth is to the company, rather than on what he or she made in a previous position.
The bipartisan legislation, signed into law on Monday by Gov. Charlie Baker, a Republican, is being pushed as a model for other states, as the issue of men historically outearning women who do the same job has leapt onto the national political scene.
Nationally, there have been repeated efforts to strengthen equal pay laws — which are already on the books but tend to lack teeth — but none have succeeded so far. Hillary Clinton has tried to make equal pay a signature issue of her campaign, while Donald J. Trump’s daughter Ivanka praised her father for his actions on this issue when she spoke at the Republican National Convention.
By barring companies from asking prospective employees how much they earned at their last jobs, Massachusetts will ensure that the historically lower wages and salaries assigned to women and minorities do not follow them for their entire careers. Companies tend to set salaries for new hires using their previous pay as a base line.
Read full article on the New York Times: Illegal in Massachusetts: Asking Your Salary in a Job Interview