Why Maine's Ban On Salary History Inquiries Is Expected To Help Close The Wage Gap
Earlier this month, Gov. Janet Mills signed a bill into law that makes it illegal in most cases to try to find out the salary history of a potential employee.
It's not uncommon to ask for salary history even at the earliest stages of a job application. But studies have shown that the practice hurts women, people of color and people with disabilities, and it affects them more and more as they move through their careers, to the tune, in some cases, of hundreds of thousands of dollars. When the law takes effect 90 days after lawmakers adjourn, Maine will be the eighth state to prohibit the practice.
Maine Public's All Things Considered host Nora Flaherty spoke with Vasu Reddy, senior policy counsel for workplace programs with the National Partnership for Women and Families, about salary history inquiries, and why they matter.
Flaherty: Vasu, a lot of people would look at the practice of asking for salary history and say, 'Well, I don't understand why this is a big deal.' Can you explain why this is something that matters in terms of wage parity?
Reddy: Yes. It's very important for wage parity to stop the practice of using salary history to determine one's salary, because, ultimately, when someone is discriminated against in a previous job that means that the discrimination they faced in that last job will follow them from one job to the next. And so it really has a lifetime effect on women's wages. It also is important because, often, employers can use salary history as a shortcut for determining pay on the basis of previous salary history, as opposed to determining it on the basis of skills, training and experience. And so it really is, I think, a step toward really making sure that women's work is fully valued.
What do we know about how salary history information does impact what people are earning in Maine?
It's hard to determine the exact impact on the pay gap, but we do know many cases of women who have brought suit in courts for being discriminated against based on their salary history. And this is in the number of $15,000 of a difference, or $8,000 of a difference. And you know that really adds up.
How does the Maine legislation specifically deal with the salary history issue? And is that a good way of dealing with it?
The Maine legislation prohibits employers from using or inquiring about the compensation history of a prospective employee until an offer of employment has been made that includes setting the compensation level. And so what this does is force employers to actually look at the skills, training and experience, and the level of value in the job, as opposed to taking the shortcut of looking at their previous salary history. And so that means that people who have been discriminated against in previous jobs won't have that discrimination carried over to their next job.
This legislation does allow employers to collect salary information after someone's been made a salary offer. Does that matter?
I don't think that is a major issue. I don't think it's a problem that they can still collect salary history after the offer has been made. Because once the offer has been made the compensation package is set and the extra information is just there for employers for their own data or for whatever collection they need. So I don't think that's a particularly harmful provision.
In what you have discovered in your research on this, and specifically from what you know about Maine, what else do we need to know and be thinking about when it comes to salary history and what comes to legislation about it?
I think it's just a great step toward greater salary transparency and making sure that salaries are set based on merit rather than old habit. It's a great start to closing the wage gap in Maine and can only benefit the states to enact this protection and other protections.
This interview has been lightly edited for clarity.
Originally published April 22, 2019 at 3:35 p.m. ET.