Employers usually need substantial information about an applicant during the pre-employment background check process. This data includes examining someone's potential criminal record and taking steps to verify information on their resume. While conducting such a background check for employment history information, some companies may also want to know what a candidate previously received in compensation.
Most often, the reason for doing so is to help a business assess what kind of compensation package to offer the individual. However, advocates and lawmakers across the United States believe such practices are inherently unfair. They allege that using past salaries to make an offer today worsens the gender pay gap and places job applicants at a disadvantage.
Many states have acted to prevent discrimination or unfair practices based on an individual's salary history. Legislative work in this area remains ongoing. Starting in 2024, Minnesota will join the ranks of other states that have already banned businesses from asking about previous salaries for setting compensation.
From January 1, 2024, companies in Minnesota - irrespective of size - can't ask candidates about salary history information. Using this information for any decision-making purposes isn't allowed. The rule also applies to existing employees under consideration for promotions. What else should employers know about compliance besides changing interview procedures or job application questions? You may need to exercise caution when selecting some screening products for an employment background check.
Be Careful When Ordering a Background Check With an Employment History
What does a background check show about employment history? Most often, the only information you'll receive involves an individual's start and end dates, job title or role, and perhaps a description of their general duties. However, some consumer reporting agencies may provide reports that include a salary history. Receiving such a report could put you in violation of laws similar to the one in Minnesota.
Before you order an employee background check, confirm what a report will include with your screening partner. Consider that you may be in a state where agencies shouldn't report salary information. Understanding what you'll receive before you place an order is a stress-free way to remain compliant with these laws. It will be an increasingly important concern for many companies as the regulations expand.
More Laws About Salary History Are on the Way
Minnesota isn't the only state taking action in this area. Rhode Island began enforcing its salary history ban on January 1, 2023. Columbus, Ohio, will soon ban salary histories from March 2024. Other states, including Washington, California, Colorado, and Hawaii, have passed laws that require employers to publish their actual or intended compensation ranges when advertising jobs. Twenty-two states, including Alabama, Connecticut, Maine, and many others, have enacted state-wide bans on salary history.
Review Your Procedures for Compliance Today
With the focus on closing wage gaps and increasing fairness intensifying, employers must remain current on the latest law changes. At the same time, it is crucial to work with a pre-employment background check provider that can help you stay on the right side of the law. You can continue using screening tools to increase hiring confidence and effectively staff your business with a trusted partner.
About Michael Klazema The author
Michael Klazema is the lead author and editor for Dallas-based backgroundchecks.com with a focus on human resource and employment screening developments