More Employers Avoid Legal Minefield By Not Asking About Pay History States and cities are banning questions about prior pay in the hopes of narrowing gender and racial pay gaps. More employers are finding ways around the legal patchwork by eliminating the question.
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More Employers Avoid Legal Minefield By Not Asking About Pay History

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More Employers Avoid Legal Minefield By Not Asking About Pay History

More Employers Avoid Legal Minefield By Not Asking About Pay History

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AUDIE CORNISH, HOST:

How much money did you make in your previous job? Employers are allowed to ask this question in most parts of the country. But seven states and several cities and counties have banned it. Backers say eliminating questions about prior pay will help narrow racial and gender pay gaps. And as NPR's Yuki Noguchi reports, more employers are learning how to hire without asking the question at all.

YUKI NOGUCHI, BYLINE: The map of where it's legal to ask about a job candidate's pay history is rapidly shifting. Making matters more complex, the court's interpretation of what's legal also varies. This week, for example, a federal district court struck down a Philadelphia law banning questions about prior pay, saying it impinged on free speech. But last month, the 9th Circuit Court of Appeals ruled in favor of a woman who sued her employer for paying her less than her male colleague because of her previous salary. Still, other courts have issued different opinions.

Some companies aren't waiting for the legal questions to settle. Amazon, Wells Fargo, American Express and Bank of America all recently changed hiring policies to eliminate questions about pay history. Part of the appeal, says Tom McMullen, is ease and uniformity. McMullen is a partner at executive advisory firm Korn Ferry. Last year, a survey by his firm found nearly half of employers said they will adopt policies to comply with the strictest laws in their region.

TOM MCMULLEN: We're seeing a tipping point with more and more of these states and cities coming on board with the ban - that they're making the call that, hey, we're just going to do this across the US.

NOGUCHI: McMullen argues the question isn't necessary. In fact, he says companies eliminating the question can adapt by improving their internal processes and doing more research before making an offer.

MCMULLEN: Organizations are going to need to rethink their approaches in terms of how they make an appropriate compensation offer.

NOGUCHI: That is exactly what has happened at CareHere. Jeremy Tolley, CareHere's chief people officer, says he hated probing someone's salary history because it always felt intrusive and awkward. But ten months ago, the Nashville health care provider eliminated it in response to some of the regulatory changes. CareHere now set salary ranges for each job then shares that information upfront with job candidates.

JEREMY TOLLEY: Our recruiters say that it's easier now because we're showing our hand to the candidate. We're telling them what our pay range is right out of the gate. And it's really improved candidate relations. That's for sure.

NOGUCHI: Tolley says there's another benefit - a bigger, more diverse pool of candidates. For example, job candidates aren't automatically turned down just because they earn more than the salary range.

TOLLEY: They're interested in the company's culture. And they're more interested in flexibility and remote work. All of those things factor in and not just straight compensation. So when you eliminate someone just based on simply what they expect to make, then you could be eliminating a candidate without good reason.

NOGUCHI: And he says it makes the interview process far less uncomfortable. Tracey Diamond is a Philadelphia employment attorney. She says many of her clients are taking prior pay questions out of their hiring process. Some however are sticking to the practice, even as the law changes around them.

TRACEY DIAMOND: To them, it was important for them to know their applicant's salary history coming in. So they have taken the position of, until we can't do so under the law, we're going to continue to use this tool in keeping with all the other factors in assessing their candidates.

NOGUCHI: It's a risky policy, she says, and one that's likely to have to change soon. Yuki Noguchi, NPR News, Washington.

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