Insights into the forces shaping our industry.

In an interesting development, Massachusetts recently passed legislation that outlaws the ability to ask a job applicant his/her current income. Specifically, it requires a company to state what the position pays upfront, based upon an internal calculation of the value placed on the position within the company. Ostensibly, this law will reduce the gender pay gap. The law also requires equal pay for work of comparable character; basically an attempt to equivocate two different positions; such as a cost accountant and a design engineer or a marketing position. Additionally, the law also proscribes a company’s right to prohibit a worker from telling other employees what they are paid.

There are a lot of State laws that have centered on gender equity: CA requires the company to prove they pay equal workers equal pay; there are 12 states that enable employee discussion about their pay within the company, and Federal law prohibits gender-based pay inequity. But the challenge with all of the legislation has been the burden of proving a cause for legal action. MA takes the step of removing the practice of requiring previous earnings from an application or interview process of a new employee; thereby creating an interesting dynamic of making a job offer to someone who may be paid substantially lower than the position pays.

But there are several nuances to its implementation that gives us pause:

Money = Performance.  In 17 years of recruiting we have reliably demonstrated to ourselves that there is a linear correlation of money to delivered value. It is NOT a 100% relationship as there are always life dynamics that can cost a quality candidate a setback in income; the Great Recession being a notable one, but personal challenges such as leaving to take care of elderly parents, or moving due to family conditions that require taking a smaller job, company or division closings, etc. But for a straight-forward resume, with demonstrated career progression, it is very closely aligned with increasing money. Higher paid people TEND to have higher levels of production. Interviewing for a senior engineer and not being able to talk money upfront can be very cumbersome. And frankly, compensation programs are all over the spectrum, from 100% fixed income to 100% variable.

Interviewing practices. Decades after the prohibition of age discrimination we still get client requests for ‘young’ every week. And mostly, young is desirable because they’re cheaper. So if your budget is low, you go young every time; making the mostly false determination that you will be able to ramp them up to producing like an old guy quickly. (It rarely turns out that way). But my point is that interviewers by and large don’t change their interviewing practices overnight (or over-decade). So the practice of asking how much money you make is endemic and inculcated in our culture. MA citizens may be far more agile in their ability to change that practice, and frankly, I hope they do, but it’s tough to get an interviewer out of the mindset of asking about money, age, illness, even ethnicity.

Who can ask?  For years, I’ve asked candidates questions that seem ‘un-askable’; such as age, such as marital status or number of kids, kid’s ages and schools, etc. As a firm rule, we don’t discriminate against any of our candidates for any protected clauses, but we do ask questions that help to define for our clients the relative probability of moving a family with 2 daughters in high school; the relative amount of money it’ll take to hire somebody who is facing 3 college tuition bills, the size of their mortgages, the probability of selling a home, etc. etc. (we had a candidate who determined the cost of hay for his horses was too much to relocate). We’ve had candidates tell us they need to move near to a specific mosque or temple. So the question is, will clients see recruiters as the purveyors of this protected information about compensation? I’ve not read the entire MA bill, but I would believe that a client shouldn’t be able to ask anybody; including third parties how much money a prospective candidate is making. But I have a genuine concern that we need to check our liability insurance against the wording in the MA law.

Gender equality. Most important about the MA law is that gender pay is definitely NOT EQUAL. See the link below for both the MA law and a Time Magazine summary on gender pay equality; it’s shocking how rampant gender inequality is; doctors, lawyers, engineers, teachers, CEO’s, etc…  it’s evident there is a problem. So kudos to MA to attempt to legislate gender equality. The only limitation to its success is… people.

Above graphic sourced from Time Magazine, March 2016 issue. Also see full article from Time.

Read: The NY times article on the MA law