New California law about asking salary history

[Dave Jensen]

See the article enclosed about a new law -- California the latest, of three or four states passing such laws.

It sounds like a great idea, I'm sure, to job seekers. In reality, I'm very pessimistic. I think this will hurt both companies and job seekers. Companies will be forced to state a "range" for the job, and it will not be the real range, it will be some kind of range that's OK for publication. Then, some job seekers will drop out, and in the old system they would have stayed in the process and negotiate and get a much better deal than what the company now has to quote as "the range."

http://www.sfchronicle.com/business/networth/article/New-law-bans-California-employers-from-asking-12274431.php

Dave Jensen, Forum Founder & Moderator

[Rich Lemert]

Employers and recruiters have access to salary data that the typical job-seeker is either unaware is available or cannot afford to access. I therefore do not see why they would not know what they are going to have to pay to fill their position.

Further, I see almost no benefit to the company to give an inaccurate range. If they list a range that is too high they risk alienating attractive candidates when they tell them "actually, this is all we were planning to pay for this job." If they list a low-ball range, they risk not attracting the kind of employee they're really looking for.

Finally, regardless of any of the above, both parties should base their negotiations on what they expect going forward. The employer is looking to see if the applicant has the skills and ability to do the job at the salary they are prepared to offer. The applicant is looking to be fairly compensated for the skills and abilities they feel they have to offer. One's current salary is, at best, a weak proxy for these skills and abilities.

I've seen the argument made that "but applicants don't always have realistic salary expectations, and we need to know what they make now to be able to determine this." My first response is that this determination should be based on their skills and abilities - and if you can't determine whether or not the candidate possesses those skills and abilities you really shouldn't be in a position to hire them. My second response is "so what?" If their salary expectations are out of line, they won't get interviews and the won't hire anyone - the same way a company won't get any non-desperate qualified applicants if they offer a non-competitive salary.

I've also seen the argument that "this is all well-and-good for an experienced applicant, but it doesn't really apply to someone seeking their first position. Besides, everyone knows that a post-doc or graduate student stipend is artificially low." I don't buy these arguments either. If you already know the numbers are meaningless, then why do you need them? What information do they give you that you cannot get in much better form by talking to the post-docs PI?

The bottom line, for me, is that we wouldn't even need to be discussing this or enacting laws regarding the question if everyone was focused on the only two questions of importance: is this person capable of meeting the responsibilities of this position, and is he willing to do so at a price we are willing to pay.

[Dave Jensen]

Great post Rich. Well thought-out. If I have the time tonight or soon, I'll post a couple of counterpoints to think about. But your argument is a good one and I wouldn't disagree with your major points.

Unfortunately, I know what will happen. In fact, I can forecast it exactly.

HR departments will come up with a "range" if someone asks, and those who know how to negotiate will bust it wide open.

Those who don't will get "offers in our range." It leads to the same-old situation. In other words, a discrepancy between those who can, and those who can't, or those who think they don't need to push, and those who will push, etc. This is just another needless regulation, from legislators who think regulating our every action is the best approach.

Dave

[D.X.]

Hi -

If employers are to post a range, than I think it will be fairly accurate on what they want to offer in my opinion.

Usually when the Company has take a decision to hire a Person, they have already decided from a Budgeting Point of view what their target salary is and they have a range surrounding that in their finanical Sheets.

By the time finance and legal has signed off on the request to fill a Position to HR with sign-off also from the Hiring Manager, the HR will know what salary range they're working with when it Comes finding and processing candidates. So basically, the range is known before Hand. So if they do post the range its fairly accurate.

Now the caveat here is that i'm being established pharma specific, usually the salaries and ranges are bench-marked to the Market they choose to base value on for the position (so call Fair Market Value for the industry sector). And before a Position is approved to go to candidate search Phase, there are alot of sign-offs as noted above, I can't speak for start-ups or other sectors.

I do think the candidate does benefit in that regard, so they know what they're getting themseleves into before Hand -

HOWEVER - this does not mean that there is no negotiating room! In some circumstances - if you're good at it you maybe able to negotiate out side that range - provided that 0 you are a Talent that the Company want's to go for. IN the back in if they agree to go above the range that's in the finance Sheets for the FTE then the Hiring Manager will have to go to HR and Finance and Legal to get that signed off, i.e. go to bat for you.

Personally, I like the fact you don't have to disclose the salary range because far to often compnanies like to hold that agaisnt you irresepective of negotiating skills particularly if they can get away with the low end of the range. I think the if you know the range that you're in with the employer the then conversation easily transitions more to what Rich said, Focus on the skills and then if there is mutual Agreement on the Price tag.

And yes Dave, if the published range is too low and applicants don't apply, what's wrong with that? The applicant is empowered to say no and search elsewhere, HR and Company don't waste time with processing candidates where expectations are not aligned.

DX

[Rich Lemert]

Great post Rich. Well thought-out.

Thanks.

Unfortunately, I know what will happen. In fact, I can forecast it exactly.

HR departments will come up with a "range" if someone asks, and those who know how to negotiate will bust it wide open.

This is true regardless of whether or not you know the candidate's current salary, and is a strong argument for the candidate doing their research to know have some idea what the market rate is for that position. I would further argue that the "anchoring" principle can come into play when the candidate is required to give their current salary. It's not so much that the company is intentionally trying to "low-ball" the applicant as it is the current salary sets an anchor point in everyone's mind.

This is just another needless regulation, from legislators who think regulating our every action is the best approach.

Most regulations are just putting into law what people should be doing anyway.

[RSD]

Most regulations are just putting into law what people should be doing anyway.

In California, most regulations are just putting into law what the government thinks you should be doing, but people will largely go on doing what they were going to do anyway. Ever been to a Starbucks in CA? They all have the same warnings about carcinogens that you find on a gas pump. The end result is that all such warnings are ignored because everything has a warning on it. I think the current regulation is similar - good intention, and makes us feel like we are "doing something", but won't actually have a meaningful change.

[Dave Jensen]

Most regulations are just putting into law what people should be doing anyway.

In California, most regulations are just putting into law what the government thinks you should be doing, but people will largely go on doing what they were going to do anyway. Ever been to a Starbucks in CA? They all have the same warnings about carcinogens that you find on a gas pump. The end result is that all such warnings are ignored because everything has a warning on it. I think the current regulation is similar - good intention, and makes us feel like we are "doing something", but won't actually have a meaningful change.

My feelings exactly.

Dave

[Rich Lemert]

Ever been to a Starbucks in CA? They all have the same warnings about carcinogens that you find on a gas pump. The end result is that all such warnings are ignored because everything has a warning on it.

Not really the best example you could have used. The law requires the carcinogen warnings to be posted, and that is being done. Whether anyone pays attention to the warnings, the law itself is not being ignored.

Similarly, the "current salary" law does not prevent job seekers from providing their current salary. It only says that employers cannot ask for the information - just as they cannot ask for one's marital status.

[RSD]

Not really the best example you could have used. The law requires the carcinogen warnings to be posted, and that is being done. Whether anyone pays attention to the warnings, the law itself is not being ignored.

Not to take the salary discussion on a tangent, but if the goal of the carcinogen law is to add posting requirements to businesses, then yes the law is effective. If the goal is to warn consumers of meaningful exposures of potentially carcinogenic chemicals in a way that will change behaviors and reduce disease incidence, then the law fails miserably. Implementing an ineffective law is worse than doing nothing as it increases regulatory burden and adds liability risk if not properly implemented by a company.

I agree that the "current salary" law does not prevent individuals from sharing information, but I guess I am skeptical about whether it will have any meaningful effects in the sciences. Perhaps other industries will see some change?

[Nate W.]

Dave, thanks for sharing the article and great synopsis Rich. There is nothing more annoying than an employer insisting on know one's salary before they consider your application or interview you. I have always believe that establishing a mutual fit and interest is more important than talking about compensation initially. It is has become so frustrating to deal with as a I have progressed in my career; that I just assume an employer or recruiter engaged in this practice is sending a red flag that this employer is difficult to work with and potentially has financial issues. So I politely say I'll pass.

Also, I believe that networking helps alleviate this problem. When negotiating with a hiring manager in which you have established a mutual relationship; often you get a far better outcome than when HR coordinates the hiring process and handles compensation. When using the backdoor and talking with the right manager, this takes HR out of the equation where they are just a formality. In my experience, there is never any flexibility when talking with HR about compensation.

I believe this law will not solve the intended problem of gender inequality in pay and will make it more difficult for experienced workers to negotiate compensation, especially if HR takes over that role. However, it might help inexperienced workers just out of graduate school or a post-doc where they have been paid a paltry salary for years. Because I believe some employers lowball prospective academic scientists given that they are paid so little.

My questions are:

1) Why are some companies so insistent on knowing salary before the interview?

2) Don't they realize not all candidates interviewed will not be a good fit; so, knowing salary history beforehand is a moot point.

3) Under this new law, would it ever be advantageous to reveal your salary history? In what circumstances, would you do so (i.e. after you know the salary range)?

4) Don't private sector companies know that graduate and post-doctoral students make a only minimal level of compensation or a stipend? Why try to take advantage of this situation?

FYI: Equifax keeps a database of salary histories know as TALX "The Work Number" and with the recent breach this information was potentially disclosed to hackers. Many research Universities, like Duke, Baylor, and the UC system, and the NIH subscribe to this system. You can get your information removed from this system.

https://techcrunch.com/2017/10/11/equif ... histories/

https://www.bloomberg.com/news/articles ... -companies

https://krebsonsecurity.com/2017/10/equ ... y-history/