Can Background Checks Verify Salary Information?

Competitive wages are central to attracting and retaining talent. Understanding an applicant’s expectations is essential, too. For both these reasons, employers may take an interest in someone’s prior compensation. How much did they make in their previous role? You might find that information helpful in determining someone’s pay. Since you likely already conduct vetting, such as criminal background checks, you may wonder if pay data is available to you the same way. Can background checks verify salary?

Typically, no. A routine background check doesn’t verify salary history. It may show other information, including confirming an applicant had jobs with employers they listed, but not salary information. So, how can hiring managers find that information? Can you ask a candidate directly? As we’ll see, the answers may depend on state law in your area.

To unravel more about this process, let’s explore why companies may wish to engage in this practice. From there, we can explore the state of the law and why this process is controversial.

Why Do Employers Verify Salary History?

For positions paid hourly, compensation history is rarely an essential factor. The business sets compensation for job roles at a specific level. However, the thought process is more complex for jobs that pay out a set salary. Especially in competitive industries, your salary offers to candidates are critical. Offer too little, and you could lose out on top talent. Offer too much, which could negatively impact financial performance. Balancing these needs isn’t easy.

Therefore, a prospective employer may want to know what a candidate received in the past. Knowing this information can help you tailor a package. You can balance your financial needs with a candidate’s desire for a robust salary.

Many employers ask applicants to state their desired salary range. Knowing prior pay could help you avoid overpaying someone with less experience than other candidates. If an applicant claims a very high salary, you may want to confirm whether it’s real first. With no database of everyone’s compensation, there’s no instant way to use a background check to find those facts.

How Do Employers Conduct Salary Verification?

A typical pre-employment background check doesn’t have salary information. Most screenings, instead, involve checking for serious criminal records. Verifying someone’s resume information is also a focus of background screening.

Even a typical employment screening, which verifies employment, won’t turn up salary information. Many companies are reluctant to share such information, especially with potential competitors. Salary is a significant way companies compete for talent. Others may keep their compensation data closely guarded.

So, how can a potential employer find out more? It could be a part of a job interview process. It could also be a part of salary negotiations once you make a conditional job offer. However, keep in mind that you cannot insist on an answer. You cannot compel anyone to disclose their salary information. Taking adverse action because someone would not reveal their pay may also be illegal. Many states have outlawed the practice of asking compensation questions.

What the States Say About Salary History Information

It was previously much more common for employers to ask about salary information when hiring. Over time, concerns developed about the fairness of doing so. As a result of these concerns, many cities and states have banned the practice.

The shape of these laws varies substantially from state to state. Some ban employers from asking job applicants any pay-related questions. Others prohibit employers from denying applicants who won’t disclose their prior pay. In California, employers can’t use salary information to set someone’s pay even if that person voluntarily discloses the information. Employers should review the law specific to their state.

In total, 22 states and the District of Columbia now regulate the usage of salary history in some way. 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 23 individual cities and counties across the United States also have such laws[i].

• Albany County, NY
• Atlanta, GA
• Cincinnati, Ohio
• Chicago, IL
• Columbia, SC
• Ithaca, New York
• Jackson, MS
• Jersey City, New Jersey
• Kansas City, MO
• Montgomery County, MD
• New Orleans, LA
• New York City, New York
• Lehigh County, PA
• Louisville, KY
• Pittsburgh, PA
• Philadelphia, PA
• Richland County, SC
• Salt Lake City, UT
• San Francisco, CA
• Louis, MO
• Suffolk County, NY
• Toledo, Ohio
• Westchester County, NY

Wisconsin and Michigan have passed laws prohibiting bans on pay history inquiries. Cities and communities there can’t stop employers from asking. Therefore, employers in both states can freely ask applicants about past compensation. Applicants aren’t obligated to answer, however.

Why Is There So Much Pushback Against This Process?

The salary verification process is a controversial part of the hiring experience. Advocates and lawmakers have alleged employers often misuse this information. It could potentially disadvantage an applicant trying to negotiate for a better salary. Some even point to the practice as a factor that contributes to the gender pay gap.

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. However, the pace of new salary history bans has slowed.

In their place, some legislatures have instead opted for pay transparency laws. These laws require employers to disclose compensation information, usually on job postings. This information usually includes minimum and maximum salary ranges. For example, California enacted such a law that went into effect in 2023. Businesses with more than 15 employers must disclose pay scales for jobs.

With this information clearly stated, lawmakers believe negotiations will occur on a more equal footing.

Do Background Checks Have Any Employment-Related Information?

The average background check might not have salary data, but they’re still valuable tools. At backgroundchecks.com, we don’t report salaries on employment history checks. The legal landscape makes compliance a challenge and a risk. However, these reports do contain other concrete facts relevant to your process. You can use these reports to verify what applicants report on their resumes or job applications.

Employment background checks can show the following:

• Job title
• Start and end dates
• Job Responsibilities
• Rehire eligibility

Use this information to evaluate an individual’s suitability. Actual experience is often more helpful in setting appropriate compensation. Other background checks can show criminal history information. Some of our products confirm educational history or verify professional license statuses. You can even order someone’s driving history record for some job roles.

Even without salary information, you can discover many other relevant facts.

Find the Information You Need for Smarter Hiring

As you structure your hiring process, be clear on what you can and cannot ask applicants. As we’ve seen, the answer to “Can background checks verify salary?” is no. Asking applicants may not even be legal in your state. Explore your options for vetting applicants in other ways. Consider alternative methods for setting fair compensation. With help from backgroundchecks.com, you can find the facts you need quickly and easily. Get started today, or learn more about screening in our Resource Center.

[i] https://www.hrdive.com/news/salary-history-ban-states-list/516662/