As states and cities address pay discrimination by banning employers from asking about salary histories during the hiring process, hoteliers need to act fast to stay on the right side of the law.
REPORT FROM THE U.S.—Hoteliers have had to adjust their hiring practices in response to a movement among U.S. states, counties and cities to ban employers from asking job candidates’ their salary histories.
In an effort to address pay discrimination, 15 states and 12 counties and cities across the U.S. have banned companies from asking about potential hires’ salary histories. These bans presume a historical imbalance in pay between male and female employees, said Andria Ryan, partner at Fisher Phillips. If someone was underpaid at a previous job, basing the new salary on the old one would perpetuate underpayment, she said.
Making the change
Atlanta-based Hotel Equities has been watching this movement for some time, and had stopped the hiring practice even before the city of Atlanta approve a ban on it this year, Corporate Director of Human Resources Toi Brown said.
The company implemented a universal job application and continually reviews to ensure hiring managers aren’t asking about salary history, she said.
“We constantly make adjustments to be in compliance,” she said.
Most job candidates are well informed, so they know the laws and their rights, she said. Applicants seem to appreciate that the company doesn’t ask that question, regardless of where the office is located, she said.
A salary discussion during an interview can be awkward for both the interviewer and the candidate, and removing salary history from the conversation makes for a better interview, she said.
Some might think the remaining states won’t implement their own salary history bans, but the first was approved in 2017, and only two years later, 15 states have bans, said Debra Cannon, director of the school of hospitality at Georgia State University.
“It’s really spread throughout the country, and not focused in just some areas with more progressive employment legislation,” she said. “Employers should open their eyes.”
Every company should analyze where it stands on pay discrimination, she said. Bigger companies might want to expand the scope to look at pay variances between employees of different genders and races, she said.
Because the bans have popped up in various places across the U.S., it can be challenging for hotel companies with properties in different states, Ryan said. The simple solution is to change hiring policies across the entire company to eliminate questions about salary history, she said. The challenge then is training those interviewing candidates to make sure they don’t fall back into old habits, she said.
Removing that section from a company’s application form is a simple step in the right direction, though it might be a pain point on the administrative side, Cannon said.
Managers and supervisors are the ones who most often interview job candidates, so they will have to be trained on the new practice, she said.
“It needs to be a real indoctrination that this is a cultural organization change,” she said.
Companies shouldn’t wait until a legal case has been brought to make a change, but instead take preventative steps to drive change within the organization, she said.
What the law means
Each state and local government that has banned salary history inquiries has done it a little differently, but they are consistent in stating companies are not to base an applicant’s pay on a previous salary, Cannon said.
What the law doesn’t address is companies asking candidates what they expect to make, which is a typical question, she said. In the height of spring graduation, many college grads are looking to enter the workforce, and many ask how they should respond to a question about pay expectations, she said. If a female or minority candidate goes in with lower expectations, that can still perpetuate the pay gap, she said.
“What it gets down to is that employers need to be more diligent in setting very true salary ranges,” she said. “As you go up in the corporation, there is more flexibility and more negotiating involved. There needs to be more salary ranges and not figures pulled from the sky when starting off.”
That’s not meant to belittle any company, but once an employee reaches certain levels, negotiations become part of the process, she said. Research suggests men generally are tougher negotiators than women, she said. If a company is serious about ending pay gaps, it will take a multipronged approach to fixing it, she said.
Removing salary history from the hiring process can insulate companies against pay discrimination claims at the time of hiring, Ryan said.
“These laws seem to be designed to level the playing field at the beginning,” she said.
These bans won’t protect companies against claims that might arise later on as employees receive pay increases and move to new positions through transfers and promotions, she said. It might be over the course of several years that differences in pay show up, she said. Employees are legally allowed to discuss pay, and the equal pay laws that have existed for many years can provide them recourse should they discover pay discrimination later on, she said.
When determining a salary range for a position, companies should look at what the job requires, Cannon said. For example, consider what type of work competency and skills are necessary, she said. That will help determine the base pay for someone starting out, but the company should also consider what the pay should look like for a candidate with a few years of experience, she said.
Companies should also try to move away from the subjective negotiation process, she said. Interviewing and negotiating are tough, she said. Sometimes when the interviewer has a preference for a candidate, a salary offer might be a bit above what the company normally would pay, as an incentive, she said. Companies should be careful about who they are making such offers to, she said.
Hotel Equities uses a formula and multiple resources to align salaries and wages by position with market averages, Brown said. As a national management company, it requires constant review, she said. Candidates have access to that information as well, she said.
“What the salary bans do is allow you to have a conversation based on what you can actually pay for that role,” she said. “You do take experience into account for a potential candidate. There are a couple of factors you want to look at. It’s not just a blanket ‘This person deserves this; that person deserves that.’”