How to Prepare for 2018’s New Salary Secrecy Law

Jul 18, 2017 - Joe Matar
Have you ever been asked how much you made at a previous job by a prospective employer? Soon, that question will become a relic of the past. Thanks to a groundbreaking series of changes to equal pay laws in 2016, many states are adopting “salary secrecy” regulations, which strive to promote equal salaries across multiple demographics in the workforce. In California and New York, for example, these laws are already active, and in Massachusetts, these laws go into effect July 2018. But what exactly do these laws require, and how can you prepare?

Salary secrecy law basics

There’s no singular “salary secrecy” laws that affect all businesses at the federal level—at least not yet. The new push for state-level salary secrecy arose as a response to the stall-out of the Paycheck Fairness Act, which never got off the ground floor of the US Senate back in 2014. Coordinated campaigns throughout the country have pushed states to adopt legislation that mimics many of the standards outlined in this Act, boiling down to three main tenets: 1. Restrictions on former salary inquiries One of the most important features here is a restriction on inquiries of an employee’s former salary. Basically, employers would not be allowed to ask prospective employees what they made at previous jobs. The goal here is to prevent a chaining effect, with low salary plaguing a worker indefinitely throughout his/her career. 2. Open discussions about salaries among employees This legislation would also explicitly allow for open discussions about salary among employees. Currently, many companies forbid salary-related discussions, but an open environment could reveal hidden discriminatory practices. Though it has been legal to discuss salary among co-workers, the practice will be enforced by the new law. To learn more, listen to this program with experts Laurent Drogin – New York lawyer, recruiting manager Pete Radloff – and Katie Donovan who created the Massachusetts law. 3. Mandates to prove motivation for pay disparity Some pieces of legislation are also forcing employers to prove the objective factors that led to an employee’s salary, mandating that salaries be calculated based solely on merit, experience, and other demonstrable factors. It’s worth noting that not all states are adopting the same set of rules and regulations; this is just a basic outline that inspired many states to take action.

How employers are preparing

Regardless of when these laws are enacted, or if your state is even on the list of jurisdictions considering this new legislation, it pays to think ahead and proactively prepare for these new rules. Not only will you exhaust fewer resources to get your company up to speed, you’ll also set a positive example for other businesses and demonstrate leadership in your industry.
  • Keep communication on record

    Since salary discussions are becoming more sensitive and more heavily regulated, it’s in your best interest to keep all your inter-office communications on record. Employ encryption and authentication standards to your email accounts and devices, and make sure someone in your HR and/or legal department can retrieve any conversation if it ever becomes necessary to do so.
  • Change your applications and interview scripts

    Do a thorough audit of your current job application forms and interview scripts. If you have any instances asking prospects about their former salaries, now is the time to eliminate them. You’ll also want to talk with your interviewers individually to make sure they’re aware that they can’t explicitly ask interviewees for their salary histories.
  • Update any rules forbidding inter-office discussion of salary

    Under current rules, your company may have an explicit policy forbidding your employees from discussing salaries with one another (or it may be implied). You’ll need to update your employee handbooks and how you talk to new employees if you want to be in full compliance with the new legislation.
  • Have a standard rubric for employee salaries

    This step may take more work, but it will be worth the effort in the long run. Rather than basing salaries on subjective or qualitative measures, adopt a standardized system for determining salaries, based on job descriptions, previous experience, and objective merits. You may one day need to prove why each employee at your company has the salary they do, and an objective, clear-cut rubric for these determinations will validate your distributions.
Take the time now to revisit your salary policies, and prepare your HR department for the impending changes. The sooner you adopt these new standards, the better your company will be served. Anna Johansson is a freelance writer, researcher, and business consultant. A columnist for Entrepreneur.com, HuffingtonPost.com and more, Anna specializes in entrepreneurship, technology, and social media trends. Follow her on Twitter @Number1AnnaJo and on LinkedIn. Editor's Note: We're excited to include a highly applicable episode of You're Hired! Radio from Lorne Epstein for you. This episode includes special guests Laurent Drogin – New York Lawyer, Pete Radloff – Recruiting Manager, and Katie Donovan who created the Massachusetts law. Listen and let us know what you think.

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