CA's new salary disclosure law may have very positive effects for entry level and middle management employees. That said, I'm not confident that it will put an end to the headwinds faced by some female executives in the workplace: tough interviews, low initial offers, and difficult salary negotiations.
I may be proven wrong (happily so), but here are my initial thoughts:
As an executive recruiter, salary histories are a frequent topic of conversation with candidates. It gives us a sharp sense of how we can compete in the market, provides evidence to advise our clients on their salary ranges, and helps us identify outlier candidates (the high cost, high performer or the vanity-titled-low-skill wannabe). Compensation acts as a proxy for the economic value that candidates contribute to their current company. With tough-to-fill roles, a candidate's W-2 sets the price before negotiations begin, with job offers being built to lure a prized executive to join a company highly motivated to make a great hire.
Under CA's new law, however, employers can't even ask salary history. A candidate may now choose to keep mum and let the employer make the first bid. Sounds great, but it's a risky game.
First, it assumes that the candidate has demonstrated the superior value in interviews and that salary silence hasn't raised doubts among their future colleagues. Without a compensation number to demonstrate a person's economic value in the market, interviews will become longer, tougher, and far more focused on KPIs, culture fit, and performance.
Second and more importantly, operating in the dark about salary data, it will nearly always benefit the potential employer to start negotiations at the bottom of the salary range. With the price set low, the candidate will need to negotiate her way up from the basement, providing evidence of why the employer should sweeten the deal. And what is a candidate's best evidence of what a competitive salary might be for her experience? You guessed it: prior salary history.
California employers can no longer ask job applicants about their prior salary and — if applicants ask — must give them a pay range for the job they are seeking, under a new state law that takes effect Jan. 1. AB168, signed Thursday by Gov. Jerry Brown, applies to all public- and private-sector California employers of any size. The goal is to narrow the gender wage gap. If a woman is paid less than a man doing the same job and a new employer bases her pay on her prior salary, gender discrimination can be perpetuated, the bill’s backers say.