Massachusetts just passed an equal pay law that prohibits companies from asking candidates their salary histories until after they make a job offer that includes compensation, unless the candidate voluntarily discloses the information. Massachusetts’s new law also mandates that employers pay men and women the same not just when they do the exact same work, but when their work is “comparable.” Most laws only require men and women in the exact same job to be paid equally. Also, the new law also bans salary secrecy, blocking employers from keeping their employees from talking about pay with each other.
The major rationale behind the new law is that companies use a candidate’s previous salary as a benchmark in determining their proposed salary offer (basically a bump in what they are earning now). This negotiation hurts woman candidates more than men since on average woman earn less than their counterparts (roughly $.79 for every $1 a man earns).
I applaud this new statue and hope that everyone earns the appropriate salary for the job they perform.
As someone who has spent time learning about the art of negotiation, I am fascinated on how this new law will impact salary negotiation. In the past, companies would routinely ask candidates their salary histories early in the process to box the candidate in the salary negotiation. By offering up your current salary, it is easy for an employer to propose an offer based upon your current salary. Typically, negotiations tend to cluster around the starting point so if you let the employer know your current salary then you have limited your potential upside in your salary offer.
With the removal of the salary histories, the negotiations in the hiring process will have to change. Instead of companies just collecting salary histories, they will need to be more creative in these discussions. For example, companies could start with the simple request to candidates on what salary are they looking for (especially since an exemption to this new law includes voluntary salary disclosure by candidates).
So what can a candidate do to balance the scales in the negotiation? My advice is to hold off on salary negotiations (including telling the employer what your goal salary is) until the employer proposes a job offer. Also, candidates should respond to any inquiries by saying that they are first trying to determine if this opportunity is a good fit for the candidate and the employer and any money discussions should be had at the appropriate time.
The difference in a good negotiation and a bad may mean an additional 20% to 30% of your compensation. So act smart in Massachusetts and around the country.
The Fire Brick Group
david at firebrickgroup.com