Hiring managers across Bank of America will soon be prohibited from asking a question most job candidates love to hate: How much were you paid in your last job?
The banking giant said last week in a memo to employees that starting in March, it would restrict “how we solicit compensation information from candidates,” adopting a policy that has been in place in certain markets where it was required. The change was part of an announcement Bank of America made in response to a shareholder proposal about its gender pay gap, in which it said female workers with similar experience and in similar job categories made 99 per cent of their male colleagues’ salaries. It called the ban on salary history “another step” to bridging any gaps.
Yet it is also another sign that workplace laws enacted in a growing number of states — and at the global level — are beginning to have a broader impact. According to the National Women’s Law Center, 12 states, cities or US territories have passed regulations prohibiting employers from relying on salary history when hiring — whether for all employers or just public-sector agencies — including Massachusetts, California, New York City and San Francisco. Several more are considering them, including Rhode Island, Florida and Mississippi.
As a result, a growing number of employers are recognising that it may be more fair to employees — as well as administratively much simpler — to just adopt such policies nationwide, giving the local laws impact well beyond their state or municipal borders. Companies like Wells Fargo and Amazon (The Washington Post is owned by Amazon’s CEO, Jeffrey P. Bezos) are among those who have done so.
Companies “don’t want to have to keep up with what’s happening, quite literally, on a day-to-day basis,” said Cheryl Pinarchick, who co-chairs the pay equity practice at the law firm Fisher Phillips. “It gets very cumbersome because these laws are so new.”
She said her firm is advising employers to adopt the policies more widely and that many clients are making the shift. “Unless you have a team of people who can be tracking this, even on a daily basis, you could find yourself violating a law where you didn’t even know a law existed,” she said. “It’s best practice going forward.”
She said banning questions about what candidates were paid in their last job is also a simple way for companies to do something about pay equity. The thinking behind such laws is that if women are paid less early in their careers, asking about past salaries can perpetuate that cycle, because a new job’s pay may be set off that past amount.
“I’m finding a shift in thinking on the employer side to get behind this movement,” Pinarchick said. “This is an easy way to help address inequities going forward.”
In a survey released in November, the executive search firm Korn Ferry found that more employers (46 per cent) said they would comply with the laws in the most stringent location where they operate than employers that said they would comply only to the level of local laws (32 per cent). That’s happening even though two-thirds of employers who responded said they didn’t think the regulations would have much effect.
“There will be a tipping point, if it’s not there already, where this will become the de facto way of handling this in this country,” Korn Ferry senior partner Tom McMullen said in an interview in November.
Bank of America spokesman Andy Aldridge said that while administrative ease might have played a role, the company expanded the policy as part of an effort to create a “culture of fairness and respect” and to help address pay equity. In the memo, the bank’s global head of human resources, Sheri Bronstein, said the policy expansion would “help ensure we consider new hires for individual qualifications, roles and performance, rather than how they may have been compensated in the past.” Questions about a candidate’s salary expectations would still occur, Aldridge said.
State laws on other workplace issues also appear to be having a broader impact. Starbucks said Wednesday that it would adopt a paid sick leave benefit for all of its workers, a perk that had only been available to workers in locations where laws required it. The move came after employee requests for paid sick leave — as well as changes in the tax law, which, the company said, “accelerated” its ability to fund it.
Forty-one states and localities now mandate paid sick leave, according to the president of the advocacy group National Partnership for Women & Families. Its president, Debra Ness, said in a statement after the Starbucks announcement that “the move demonstrated that multi-state employers can easily navigate state and local paid sick days laws by establishing generous, uniform policies of their own.”
Another factor in companies’ thinking, said Natasha Lamb, the activist shareholder who has filed pay gap proposals at five major banks including Bank of America, could be new regulations in Britain. This year, firms with more than 250 employees in Britain will have to begin reporting the median pay gap between male and female employees — an overall number that is not split by job title. As a result, the British figures are likely to show much bigger gaps, because women frequently hold fewer high-ranking or high-paying jobs overall.
Sharing numbers from the more fine-tuned analysis now — and talking about new policies to help bridge the gap — could help companies get ahead of negative headlines. That way, she said, companies will be able to say, “Yes, the median number shows a structural pay gap, but we’re working on that through our policies.”
Lamb said the ban on salary questions has come up behind the scenes in many of her discussions with the 25 companies where she’s filed proposals.
“Despite the fact that the federal government has been moving so slowly — or shooting down regulations — states are moving forward proactively,” she said. “Companies are responding by changing their own practices. That’s not only smart, it’s necessary, because this issue isn’t going away anytime soon.”