A prospective employee’s salary history is a critical tool in your salary negotiations during hiring. The salary history can tell you your prospect's current salary, their former salary, and all of the extras that they were eligible for in that position. It also gives you information that you can use as a factor in your employee selection.
Asking a job prospect for their salary history has also been identified as a factor in employment salary discrimination for women and minority candidates. Although, when factors such as education level, type of work, experience, and job tenure are taken into account, this gap narrows considerably.
What Is a Salary History
A salary history is a listing of your potential employee’s current and former jobs with the amount and kind of compensation they received in each position.
For example, a salary history item should provide the following information:
- Employer: J.C. Smith and Associates
- Position: Supervisor
- Salary $55,000
- Other: Bonus eligible, a comprehensive employer-paid benefits package, and profit-sharing.
It is legal to ask a potential employee for a salary history at any point in the hiring process. Currently, in most jurisdictions, it remains legal—although this is changing rapidly in response to gender pay gap issues. This changing landscape is why you need to know the applicable employment law in your location as more and more jurisdictions are banning asking for salary history information.
Will Your Applicants Respond to Your Request?
Whether the prospective employee will respond to your salary history request—or continue as an applicant—will depend on how privately they regard this information. Some of your best candidates may see this information as private and not your business.
Articles proliferate online about how an applicant can respond to this request without providing your requested information. As an employer, you need to decide how important having the information is in your selection process.
Many good candidates feel that it is a violation of their privacy and that providing the information puts them at a distinct disadvantage in a salary negotiation. So, asking for a salary history may alienate some people you want to hire.
Each employer needs to decide if the information required bears results that are sufficient to overcome the loss of potentially superior employees.
The salary history information tells the hiring manager if they can afford you. If the applicant’s current salary, benefits, and total compensation surpass what is available within the budgeted salary range, the information saves the employer and the applicant time and energy. Additionally, the employer assumes that you expect a raise if you change employers, so this information tells the manager if they can afford to meet your expectations.
A salary history that exhibits that an applicant has performed increasingly responsible and more highly compensated positions shows that this employee was successful, ambitious, and promoted. This information might make an applicant more desirable in an employer’s eyes.
Employers assume that your current or former employers did their homework about your compensation package. This compensation package tells the prospective employer about how your employer valued your services, the market in which their jobs are competing, and what they will need to pay to attract you to their employment.
Just as employers have reasons why they request salary history from candidates, reasons exist about why this is a bad practice. The request may alienate candidates who feel you are prying into their personal business.
Salary histories can be deceiving as well. A candidate may be severely underpaid in their current job and job searching to right this wrong. They may be willing to take a lower-paying job. Maybe they would like less responsibility, want to step away from a management position, or they could just be changing jobs for other personal or family reasons.
In a poor economic climate, candidates may be willing to accept less compensation—even substantially less—to obtain employment. In positive economic times— when job searchers rule the market—you may be alienating the quality applicants you need to fill increasingly hard to fill jobs.
When to Ask for a Salary History
Employers can ask for a salary history at many times during the hiring process. These times include in the job posting, during the telephone screen, and during the interview. If listed in the job posting, an applicant can decide whether they want to divulge this private information before applying. However, be prepared to see less qualified applicants.
As a candidate, you need to understand that many employers will ask for this information. This request can come even if the information was not requested in the job posting. Employers reason that when a candidate feels under serious consideration for a position, his inclination will be to respond.
As an employer, companies need to understand that, increasingly, applicants are reluctant to share this information. Your best bet can be to ask for a ballpark range of salary or ask about the benefits package the received previously.
Employers could eliminate this ritual by providing a salary range in their job postings. Most companies know the range they can offer for any given position.