What is compensation history?
Compensation history, sometimes referred to as salary history, is the private information that some organizations may ask candidates during the interview process. Sometimes, the applicant is asked to voluntarily share how much they have earned in previous roles they have held as a way to determine their eligibility for the role they’re interviewing for.
This information is typically shared in a document that details all of an employee’s past earnings. The document has information regarding:
- Applicant’s name
- The name of each company the applicant worked at
- The job title at each company
- The salary and benefits packages the candidate has received in their past roles
Once an organization receives this information from a candidate, it’s common to keep the data organized within compensation management software, which can help HR professionals access employee compensation history and talent records. This allows them to easily make compensation adjustments when making salary decisions.
Legality of compensation history requests
There has been an increased number of state and local governments that have adopted laws and regulations prohibiting employees from requesting a compensation history document from job applicants. These laws have been enacted as a way to end pay discrimination.
This is a non-exhaustive list of these cities and states with legal rules surrounding salary queries:
- Alabama
- Atlanta, Georgia
- California (with additional regulations specific to San Francisco)
- Cincinnati and Toledo, Ohio
- Colorado
- Columbia and Richland County, South Carolina
- Connecticut
- Delaware
- Hawaii
- Illinois (with additional regulations specific to Chicago)
- Jackson, Mississippi
- Kansas City and St. Louis, Missouri
- Louisville, Kentucky
- Maine
- Maryland (with additional regulations specific to Montgomery County)
- Massachusetts
- Michigan
- New Jersey
- New Orleans, Louisiana
- New York (with additional regulations specific to New York City, Suffolk County, Westchester County, and Albany County)
- North Carolina
- Oregon
- Pennsylvania (with additional regulations specific to Philadelphia and Pittsburgh)
- Puerto Rico
- Salt Lake City, Utah
- Vermont
- Virginia
- Washington
- Washington, DC
- Wisconsin
Banning organizations of the right to ask for compensation history makes it more difficult to base their offer on the prior earnings of an individual. It also eliminates the awkwardness that may come if a candidate refuses to provide their salary history.
Benefits to asking for compensation history
There are many reasons why organizations might ask either a potential or current employee for their compensation history. These reasons can include:
- Determining a candidate’s market value or gauging the level of experience a candidate may have
- Ensuring a candidate’s expectations are aligned with the budget of the open role
- Checking that the company is offering a fair amount for the open role
- Using the information as part of developing a compensation and benefits plan
Best practices for asking for compensation history
As an employer, there are certain times it’s considered best practice to ask for compensation history. When a company can ask for compensation history from a candidate or current employee, it occurs during the following instances:
- In the ad or posting for the open role: Specify a candidate must disclose salary history, current salary, or salary expectations to be considered for the open role. Employers can indicate a required field on the website or ask that candidates include details within their resume or cover letter.
- In the initial telephone screen for the open role: Before a candidate is invited to come into the office, the HR manager or recruiter should specify the need for salary expectations or history.
- In the official interview for an open role: If the expectations for compensation history haven’t come up yet at this point, an employer will ask during the first in-person or official interview. Some organizations choose to handle the question in person to avoid awkwardness and to gauge an individual's response.
- In the promotion stages to current employees: If a current employee is up for a promotion, an employer may ask for compensation history to gauge their trajectory with the company and what they expect if a promotion were to take place.