She Negotiates are often asked by their clients whether they should disclose their current salary when negotiating pay at their new shop. By turns, they’ve said no and yes but.
Rare is the employee who is seeking a new job for the same old compensation. That’s a good reason to withhold past salary from a prospective employer. An applicant’s existing comp will serve as an anchor in the salary negotiation. That’s a bad thing for someone seeking a better job at higher pay because negotiators are influenced by anchors throughout the course of the negotiation. Because disclosing existing salary weighs down the negotiation of a new one, there’s good reason not to disclose it.
On the other hand, we’ve learned through our contacts with human resource professionals that a prospective employee’s refusal to answer questions – including one about their existing salary – ticks them off. And applicants don’t want to be irritating the people with the power to set their compensation or hire them in the first place. That’s a darn good reason to answer the question if asked.
Tell and Re-Anchor!!
Because tell and don’t tell put job seekers between a rock and a hard place, we recommend re-anchoring by: (1) setting the anchor according to current market value (based on the applicant’s personal knowledge or from research at such online sites as salary.com, payscale.com or glassdoor.com); and, (2) explaining that the applicant’s current compensation doesn’t represent their current market value.
That makes good sense and is sound negotiation strategy. But it doesn’t totally remove the anchoring effect of current comp.
California Law Will Make It as Risky to Ask for Past Salary and Massachusetts Law Will Make It Illegal
California leads the way in addressing the wage gaps that continue to plague women and minorities. In 2017, employers will be prohibited by California’s Fair Pay Act from using prior salary to justify gender pay disparities. Although the 2017 amendment to that Act will not prohibit employers from inquiring into an applicant’s salary history (as Massachusetts law will in 2018) it makes it risky for them to do so.
As the Employment Matters blog advises, California employers must not only “ensure that disparities in the wages of employees who perform similar work are not based on sex, race or ethnicity,” they will also be required to ensure those disparities are not based “solely on prior salary history.” Because the California legislature has expressly found that an individual’s prior earnings . . . may reflect widespread, longstanding, gender-based wage disparities in the labor market, California employers are on notice that they may be perpetuating the gap by asking applicants to disclose their current compensation.
It is therefore sound risk management policy for California employers to avoid asking for prior salary and for employees to withhold it. Applicants can explain their reluctance to disclose their current salary by suggesting that it might perpetuate gender-based wage disparities in the labour market. Or something less legalistic. In their own words.
Originally posted by Victoria Pynchon on LinkedIn on 1st November 2016