What Employers Need to Know about the New Pay Equity Law

November 2, 2017 | Sherry Seaton

Last year a new pay equity initiative was signed into law in California. The law, which took effect on January 1, 2017, was a huge step towards gender equality and closing the wage gap. This new law has passed in several other states, including Massachusetts, Delaware, New York, and Oregon and is currently being reviewed in many more.

Employers across the country should know their state’s current Equal Pay Act and be aware of recent or upcoming amendments as it impacts requirements for recordkeeping, disclosure, anti-retaliation and what constitutes “equal” work.

Designed to help prevent pay disparity from following women from job to job, the new Pay Equity Act is especially significant for recruiters and hiring managers. The law greatly impacts compensation discussions, and every recruiter and hiring manager should understand and be aware of the following when discussing compensation with any candidate:

• The “what’s your salary” question — it’s illegal. Get rid of it.  Make sure everyone interviewing candidates within your organization or externally knows this.
• Similarly, it is now illegal to inquire about salary history. Recruiters, hiring managers, HR and any other interviewers cannot ask about salary history or require it on any form or application.

While not being able to directly ask about current salary and salary history is a big change for hiring managers and recruiters, it doesn’t mean meaningful compensation conversations can’t happen, or that candidates completely control the conversation.

Good recruiters know all the requirements of the Pay Equity Act and how to have an effective conversation about salary with the law in mind. As an employer, you’ll want to make sure your hiring managers are aware of the law and select a recruiting firm that is well-trained and experienced in comp conversations since the change in requirements of the law.

While we recommend being familiar with the specifics of your state’s Equal Pay Act, here are some general tips for having valuable compensation discussions with candidates under the new law:

• You can ask candidates the following questions related to compensation:
  • What is your target compensation?
  • What are you comfortable making?
  • What salary range are you looking for?
  • What does your salary need to be to make a move?
• If the candidate volunteers their current salary, you can share it with your team and use the information. Keep in mind if you have other employees within your organization doing the same or a substantially similar job with the same skills and experience level, your offer should be equal in compensation.
• Price the position. Use market surveys or other evidence to determine what is fair or competitive pay for your open position and use that as a target salary. If you have some flexibility based on skills, fit and experience, establish a salary limit for the position you’re willing to reach to get the candidate you want.

As long as you, your recruiters and hiring managers know the requirements of the most current Equal Pay Act, there is nothing wrong with asking candidates compensation-related interview questions. Remember, the person asking the questions controls the conversation.

When hiring a recruiting firm to help you fill positions, it’s a good idea to ask them how familiar they are with your state’s Equal Pay Act and how they approach comp conversations with candidates. A recruiter that knows how to discuss compensation effectively under the law and gets you the information you need is an asset, one that does not is a liability.