When conducting a reference check on a job candidate, the reference checker may be tempted to ask about the applicant’s previous salary. However, asking about salary during a reference check can be a legal minefield. Here are quick answers to key questions on this topic:
Can references legally disclose salary information? In most cases, yes. Previous employers can legally disclose factual information like job titles and dates of employment. Salary details are not off-limits.
Should you ask about salary in a reference check? Experts recommend against it. While legal in most cases, the question may violate local laws or company policies. It also raises discrimination concerns.
What can you ask instead? Focus questions on job performance, responsibilities, work ethic, strengths and weaknesses. Probe why the candidate left. Ask if they’re eligible for rehire.
Why Reference Checks Traditionally Don’t Include Salary Questions
Most human resources professionals and hiring managers avoid asking about an applicant’s past salaries during reference checks. There are several reasons for this:
Legal and Discrimination Concerns
Inquiring about salary during a reference check could open the door to legal problems or claims of discrimination. Here are some potential issues:
- Violation of state or local salary history bans – An increasing number of state and local governments prohibit employers from asking job candidates about their salary history. This includes questioning references. Asking could subject the employer to fines or other penalties.
- Gender or race discrimination suspicions – If a female or minority candidate is paid less than a white male candidate for the same role, it raises suspicions of discrimination. Even if the pay difference stems from their prior salaries, the optics don’t look good.
- Disability discrimination issues – Candidates with disabilities may have prior gaps in employment or have accepted lower pay. Inquiring about salary may surface these issues even if the disability is not disclosed.
- Age discrimination concerns – Older workers tend to reach higher salary levels based on years of experience. Asking about pay may reveal a candidate’s approximate age.
Due to these legal pitfalls, human resources experts advise avoiding the salary history question entirely.
It May Violate Company Policy
Some organizations have policies that prohibit requesting salary details during reference or background checks. Asking for this information would violate their own policy. Additionally, the former employer may have policies restricting what information can be disclosed.
Salaries Depend on Job, Location and Other Factors
Salaries can vary widely depending on:
- Job title and responsibilities
- Industry
- Location
- Employer size
- Years of experience
- Benefits package
- Negotiation skills
- Labor market demand
With so many variables, past salary on its own reveals very little about the applicant’s expectations or value. The hiring manager would need extensive additional context to interpret the meaning and relevance of prior pay.
It Biases the Hiring Decision
Research shows that knowing a candidate’s past pay can bias hiring managers to offer a lower salary. This disadvantages certain groups of applicants, including women and people of color who statistically earn less than white men. Relying heavily on salary history just perpetuates existing pay disparities.
What You Can Ask Instead
While you should avoid direct questions about pay, you can still gain useful insights during reference checks. Here are better topics to cover:
Job Performance and Responsibilities
Rather than fixating on salary figures, spend more time discussing:
- What were the candidate’s major duties and responsibilities?
- What projects did they lead or participate in?
- What goals or metrics were they responsible for?
- How did they perform in the job – strengths, successes, areas for improvement?
- Are they eligible for rehire?
Get details about the applicant’s actual work experience, skills and abilities. This gives you a sense of their competency and engagement in past roles.
Reason for Leaving
Ask why the candidate is leaving their current position, or why they left previous jobs. Look for any potential red flags like:
- Frequent job changes
- Terminations or layoffs
- Bad fit or conflicts on the team
- Non-performance based reasons for leaving
The reasons for moving on can reveal if the applicant will be a stable, contributing addition to your team.
Compensation Expectations
Rather than asking about actual salary history, you can inquire if the applicant’s expected pay aligns with the role. For example:
- “Are their salary expectations in line with the position’s pay range?”
- “Would they be willing to work for $X to $Y salary for this job?”
This gives guidance on pay without anchoring decisions to their prior compensation.
Strengths and Weaknesses
Asking about their strengths and weaknesses provides insight into talents, skills gaps and areas for improvement. Relevant questions include:
- “What were some of their biggest strengths in the job?”
- “What skills did they need to develop?”
- “Where did they excel or struggle?”
This can inform your training and development plans if the candidate is hired.
When Salary Questions May Be Appropriate
While salary questions should generally be avoided, there are some cases where they may be appropriate or even necessary:
Equity and Reference Salary Confirmation
Some employers allow references to confirm a candidate’s salary for equity purposes. They may disclose pay to ensure fair, consistent offers between candidates.
Executive Vetting
For senior executive roles like CEO where compensation is highly negotiable, pay history gives helpful context for structuring an offer.
Public Sector and Union Roles
Salary details for government, public sector or union positions may be publicly accessible. Asking simply verifies documented pay schedules.
Applicants Directly Disclose Salary
If an applicant voluntarily provides their salary history without prompting, you can confirm accuracy with the reference.
Employment and Income Verification
When verifying employment eligibility for loans, rental applications or security clearances, salary may be disclosed.
Criteria for Asking About Salary
If you have a legitimate business need to ask about salary during a reference check, ensure it meets the following criteria:
- Complies with federal, state and local laws
- Aligned with company policies
- Candidate approved the disclosure
- Information is extensively documented
- Data is stored securely and kept confidential
Consult with HR and legal counsel before asking about pay to avoid missteps.
How to Ask About Salary Legally and Ethically
If you need to ask for salary details, follow these best practices:
- Obtain written consent from the applicant approving the disclosure
- Explain why the information is essential and how it will be used
- Verify compliance with necessary laws and regulations
- Only share data internally on a “need to know” basis
- Document source, context and relevance of the compensation information
- Store salary history securely with limited access
- Use pay data objectively, not to arbitrarily discount offers
- Focus primarily on skills, experience and job performance – not past pay
The Risks of Asking for Salary Information
Requesting a job seeker’s compensation history has risks beyond just legal exposure. Potential downsides include:
- alienation of highly qualified candidates. They may withdraw if asked for salary details too early or frequently.
- Breach of confidentiality if the information gets shared inappropriately. This damages trust.
- Lawsuits if refusal to provide pay history unlawfully influences the hiring decision or leads to discrimination.
- Reputational harm if an applicant posts about pay disparities or improper questioning on social media.
- Disregarding relevant experience, skills and education by focusing narrowly on previous salary.
Weigh these risks against any benefits before deciding to introduce salary questions.
Key Laws That Restrict Salary Questions
These federal, state and local laws prohibit or limit the use of salary history questions:
| Law | Description |
|---|---|
| Federal Equal Pay Act | Prohibits pay discrimination based on protected characteristics like gender, race, age and others. |
| State salary history bans | Over 20 states now restrict questions about pay history during hiring. Restrictions vary but can include fines. |
| Local salary history bans | Many cities like New York City and Philadelphia ban pay history questions locally. |
| Fair Credit Reporting Act | Requires disclosure when former employer salary data will be used in hiring decisions. |
Employers should review relevant federal, state and city laws before asking about applicant salary history.
Alternatives to Asking About Past Compensation
You can gather helpful pay-related information without directly asking about salary history. Alternatives include:
- Market salary ranges – Research typical pay for the role in your geography using market salary surveys.
- Expected pay – Ask what salary they expect or require for the position.
- Total rewards – Discuss their preferences on benefits, equity, perks and bonuses instead of just base pay.
- Job criteria – Assess their skills, experience and education against the required and preferred qualifications.
- Salary budgets – Share the established pay bands for the job’s level vs. asking their personal history.
With some creativity, you can gain the context needed to craft an equitable offer without fixating on prior salary alone.
Responding to Inappropriate Salary Questions
Candidates may be unsure how to respond if a reference checker improperly asks about their compensation history. Here are suggestions for navigating inappropriate pay questions:
- Decline to answer and state it violates your company policy or personal ethics to disclose.
- Note the query makes you uncomfortable and redirect the conversation to your qualifications.
- Ask for justification on why the information is needed before responding.
- Politely remind them some laws restrict questions about salary history.
- If you feel compelled to answer, request that they disclose only your job title and dates employed.
- Consult an attorney if refusal results in retaliation or discrimination.
While candidates are not obligated to disclose pay, they must gauge how to diplomatically decline without damaging their chances.
Gender and Racial Pay Gap Considerations
A key reason why salary history questions are problematic is they perpetuate existing pay inequities. Women and people of color are still paid less than white male counterparts today. Basing offers on past pay just continues pay discrimination.
According to the US Census Bureau:
- Women earn 82 cents for every dollar paid to men.
- Black women make just 63 cents and Latina women only 55 cents for every white man’s dollar.
- At all education levels, women have lower median salaries than men.
Relying heavily on prior salary widens these gaps. More equitable pay requires considering skills, experience and job criteria – not prior pay shaped by historical biases.
When Salary History May Reveal Discrimination
Be alert that questions about pay can surface potential discrimination, especially involving:
- Women returning from family leave – May show gaps or slowed salary growth.
- Older workers – Long tenure yields higher pay indicating approximate age.
- Disabled applicants – May have gaps or periods of lower pay related to health or ability.
- Minorities – Likely earn less than white peers revealing race-based pay gaps.
This is why inquiries about salary are highly problematic without proper context.
Key Takeaways
In summary, key points to remember are:
- Salary questions during reference checks are legal but risky without careful handling.
- It’s better to ask about job performance, skills and reasons for leaving instead.
- If pay must be confirmed, obtain written consent and explain why it’s needed.
- Disclosing pay may reveal gender, race and age discrimination issues.
- Use salary data objectively along with skills and experience – not to cap offers.
Tread carefully when requesting pay details to avoid legal exposure or discrimination.
Conclusion
Asking applicants about salary history is generally inadvisable during references checks. While legal, it introduces risks like discrimination claims or legal violations. It can also anchor offers to past pay rather than relevant skills and experience.
Avoid inquiries about prior compensation during references. Focus on job performance, responsibilities and reasons for leaving instead. If pay disclosure is mandatory for compliance, obtain consent and explain why it’s required. Handle responses ethically and confidentially.
With care, it’s possible to gather the information needed to craft equitable offers without overemphasizing prior salary data.
