Changes to laws around pay history are on the horizon in Minnesota. Effective January 1, 2024, employers cannot seek candidates’ pay history. Minnesota is not the only state adopting these laws. According to HR Dive, there are currently 22 state-wide bans and 22 local bans involving pay history during the hiring process, and many states in the US have already had these laws in place since as early as 2017.
Dahl Consulting stays up to date on the latest employment laws to ensure compliance and provide information, insights, and resources to our employees and clients. Read on to learn what employers need to know about the upcoming pay history ban. In this article, we will cover the new law in more detail, what employers should do to prepare, and how this legislation will help to combat wage disparity.
What’s changing with the new law?
With the new pay history law, employers can no longer request candidates’ previous salary or wages. However, this prohibition does not apply if an applicant’s salary history is publicly available unless employers actively try to access this information with the intention of using it to determine the applicant’s wages, salary, earnings, benefits, or other compensation. Applicants have the option to share their salary history voluntarily. If they choose to do so, employers can use this willingly disclosed information to potentially offer a higher wage or salary than their initial offer.
This law change applies to all employers in Minnesota, regardless of their size, as well as all employees and applicants. It is important to note that with this new law, employers must offer salaries based on the current job market and applicant/employee qualifications, not their former salary.
What should employers do to prepare?
Employers should do a few things to prepare for the law change before the new year. The first item employers should address is removing any requests for pay history from all application and interview materials. It is also critical that this law change is communicated to everyone involved in the hiring process so they know they are not legally allowed to inquire about previous pay. Instead, hiring managers will “need to ask more generic questions,” such as inquiring about candidate’s earning expectations.
Additionally, organizations should begin planning how compensation will be determined and clearly communicate this information to set expectations for those involved in hiring. This includes providing written materials that can be referenced, as well as updating employee handbooks and company policies and procedures.
Embracing salary transparency can be extremely helpful in ensuring compliance and making the hiring process much smoother. Displaying a salary range in job postings and discussing this range during hiring discussions can help to determine candidate salary expectations and aid in salary negotiations. Of course, depending on the situation, these ranges can be flexible, but it will be constructive to have a salary range determined for recruiters, hiring managers, and interviewees.
In order to determine fair and competitive salary ranges, conducting market and geographic wage research is key. It will also be important to factor in the proper salary variations based on candidate experience. For example, a salary range may increase for a candidate who has an enhanced collegiate degree, industry-specific certifications, or additional years of experience compared to another candidate.
How does this law help to combat pay discrimination?
This new law will help to combat wage discrimination in Minnesota because the starting rate and future pay for candidates cannot be based on previous income that may have been lower due to discrimination. According to the Status of Women and Girls in Minnesota, the gender wage gap has stagnated over the past five years. Women are often paid less than their male counterparts even though they have the same qualifications and seniority level, earning 79 cents for every dollar men make. This problem is even more prevalent for indigenous people and people of color.
This new law can help to begin breaking the continuous cycle of discrimination that often impacts minority groups throughout their careers. Ultimately, eliminating pay history as a factor for compensation can contribute to fairer pay scales and reduce wage disparity for underrepresented groups. This important step forward is part of the larger issue of fair pay practices in Minnesota and beyond. Additionally, your organizations can help to continually support fair pay by promoting a culture of equity and inclusion in the workplace.
Employer Resources
Employers can find additional details and helpful resources about this new pay history ban on the Minnesota Department of Human Rights webpage. We recommend staying informed to ensure that your hiring teams are up-to-date and compliant as the new year approaches.
After reading this article, we hope that you feel better prepared for the changes to come regarding the pay history ban in Minnesota. Dahl Consulting shares important updates and industry insights to help you stay informed on employment-related topics and manage your workforce more efficiently and effectively. If you’re looking for customized workforce solutions, get in touch with us today!