Both sides of the negotiating table should benefit
On Oct. 31, it became illegal for public and private employers of any size in New York City to inquire about an applicant’s salary history during the hiring process, including on applications, in interviews and even while conducting reference checks.
Rather than rely on an applicant’s previous salary, employers and job applicants can now engage in salary negotiations focused purely on their qualifications and the job requirements. The new law is likely to be positive for employers and job candidates alike, while placing new responsibilities on both.
For example, employers, now more than ever, will need to be more specific in defining the exact responsibilities of each position they are trying to fill while precisely defining the salary range associated with each position. Previously, an employer could form an unconscious bias (for better or worse) regarding the competency and worth of a candidate upon learning his salary. This bias also came into play when the current pay was used as a baseline for offers. The result could be varying salaries for different candidates who would be performing the same work.
Now, employers must determine candidates’ skills while justifying to them how those skills pertain to the salary being offered. Employers will most likely need to place greater emphasis on checking references than before to ensure that candidates truly possess the skills they claim.
The biggest change, however, will come in how employers “benchmark” the salary being offered for a position to ensure it is competitive with that offered elsewhere. A staffing agency with a solid reputation for matching candidates with the right positions and access to a diverse client base could offer valuable assistance to companies facing the tasks of benchmarking and setting appropriate salaries.
While removing the salary bias ultimately benefits employers by ensuring that hires are based on skills, the law certainly benefits job candidates in several ways. Most obviously, it levels the playing field. As mentioned, two candidates with equal skill sets, but unequal salary histories, can now walk into a company and expect to be offered the same salary. But job seekers have added tasks as well if they want to fully benefit from the law. They will need to more deeply analyze their own skill sets and better understand and assess their value in relation to the market.
Because many job candidates are funneled to potential job opportunities via staffing agencies, the new law even makes the role of applicant-centric agencies more productive as well—they can sit down with candidates, assess their skill sets, match them with potential employers and also share what their salary expectations should be.
Everyone in New York City deserves to be paid based on skills and qualifications. The new salary history law should promote greater equality of opportunity and lead to more employee and employer satisfaction across the board.
This article was originally published on Crain’s New York Business.