Can You Verify Salary With a Background Check?

Employers have a vested interest in learning as much about their job applicants as possible. Employing an individual is not something to take lightly. Throughout the hiring process, employers can examine many aspects. They may order criminal background checks or verify someone’s education. They can contact previous employers to confirm an applicant’s job history. During this process, some employers want to know more than the start and end dates. Can a potential employer verify a salary with a background check?

An individual’s salary history might seem relevant for some employers. Usually, this information becomes vital when a business owner hires someone. Making an appropriate offer of compensation is critical. An unreasonable salary offer will probably cause the candidate to walk away. Meanwhile, a high wage offer for a job that deserves less could impact the company’s finances. Balancing competitive compensation with business needs isn’t easy. If you know what a candidate previously accepted, you may have to tailor a package that better balances their lifestyle.

Hiring managers want to negotiate effectively, but that requires information. How can employers find that information? You may wonder if you can ask a candidate directly. You could ask previous employers directly or rely on a third-party service. Let’s unravel the truth behind this process.

Can a prospective employer verify a previous salary?

Employers can verify a salary in some places – but not by running an employee background check. Contrary to what some employers believe, regular pre-employment background checks don’t include this information. Most screening relates to checking for the presence of serious criminal records. There is no centralized database of salary data to search. Even a typical employment screening won’t turn up salary information. Likewise, you can’t use reference checks to provide accurate salary numbers.

Contacting a prior employer might reveal key facts about an applicant. However, other companies may not wish to disclose their compensation packages. It’s also unlikely you’ll find an answer from a competitor. Salary is one of the main ways companies compete for talent. So how can a potential employer verify salary? It could be an interview discussion.

However, you can’t insist on an answer. You cannot compel applicants to disclose salary information. More importantly, many states have outlawed the practice. Businesses should review their policies to ensure they aren’t breaking the law.

The current state of salary disclosure laws

In the past, it was common for employers to ask for salary information during hiring—however, concerns developed over the fairness of the practice. Many advocates expressed concern about the misuse of salary histories. Some alleged that it contributed to the ongoing wage gap between genders. Others believe it disadvantaged applicants trying to negotiate from a place of strength. Over the past decade, many cities and states have passed laws about salary disclosure.

Some of these laws ban employers from asking about past salaries altogether. Others prohibit employers from taking adverse action if applicants won’t disclose their earnings. In California, an employer can’t use salary history to set compensation even if they have that data. In total, 22 states and the District of Columbia now have some form of salary history ban on the books. Those states include:

• Alabama
• California
• Colorado
• Connecticut
• Delaware
• Washington, D.C.
• Hawaii
• Illinois
• Maine
• Maryland
• Massachusetts
• Minnesota
• Nevada
• New Jersey
• New York
• North Carolina
• Oregon
• Pennsylvania
• Rhode Island
• Vermont
• Virginia
• Washington

A further 22 municipalities across the United States also have such laws. Only Wisconsin explicitly bans salary history inquiries. Employers in that state can freely ask about salary. Remember, though, that the applicant is not obligated to provide an answer.

Why the pushback against salary history?

The salary verification process is a controversial subject today. Critics contend that salary history checks prevent low-paid individuals from achieving meaningful earning progress. Salary history information can unfairly advantage employers in the negotiation process. That leads to devaluing talent and the potential for a “race to the bottom.” Some employers unfairly excluded candidates in the past for their refusal to cede ground in salary negotiations.

Critics agree that experience and the role itself should define salary. They believe that someone’s prior compensation should have less impact on future earnings. After a flurry of legislative activity, new salary history bans have slackened, and different pay transparency laws have originated. These rules require employers to publish a complete salary range for every position. The goal is to equalize the negotiation between both parties.

Will there be more salary history bans in the future? It’s possible. Employers should monitor developments in their area for any legal changes. With the rise of new pay transparency laws, you may need to alter your job listings to comply. It’s advisable to review the facts for your state or city.

Do background checks show other employment facts?

You may not be able to find someone’s salary history in many states, but you can uncover other facts. At backgroundchecks.com, we don’t report salaries on employment history checks. However, we can provide you with information about more concrete and relevant facts. An employment background check can reveal:

• Job titles
• Start and end dates
• Job responsibilities
• Rehire eligibility and more

This information can prove more helpful to employers trying to evaluate a candidate’s suitability.

Create an innovative, compliant screening process today. Understand what you can and cannot ask applicants. While you may not verify salary with a background check, you can use vetting for other purposes. Equip yourself with solutions to find the facts most relevant to hiring. Please contact us today if you have any questions about these checks or our other services.