As part of the sweeping employment changes that were signed into law in the summer of 2023, Minnesota’s new pay history ban goes into effect on January 1, 2024. Why the ban and how will it affect the hiring process going forward?
Why the change? Why is asking for salary history illegal?
Research has shown that pay history bans lead to greater pay equity and fairness, especially for women. It makes sense. If a woman’s future salary offers are tied to her previous pay, her income, and wealth-building opportunities are forever held back, tethered to her wage-earning start point. The data proves this, of course. 2023 wage gap data shows women making $.83 for every dollar earned by men.
Pay history bans help close that gap
Research shows that pay history bans break this cycle, requiring employers to make salary offers based on the market value of the job they’re filling and the established qualifications of the candidates being considered. Does this still leave room for unconscious bias in calculating salary offers? Sure. There is still much work to be done. But it eliminates one of the greatest obstacles to parity.
But employees aren't the only winners here. Employers benefit, too.
Contrary to initial concerns expressed by some hiring managers, this change promises to deliver several long-term benefits to organizations as well as employees. More than twenty states have already enacted similar laws, with employers discovering significant upside despite their initial concerns.
It encourages employers to publish job pay ranges, which leads to better applicant pools
When in-demand jobs are posted without clear pay parameters, they inevitably attract candidates whose income needs exceed the employer’s budget. Asking a candidate to complete an application, much less interview for a position they could never accept is a waste of everyone’s time. Worse, it creates a lasting, impression. By contrast, when salary ranges are disclosed, the hiring manager has an applicant pool whose salary needs fit within the pay range. Studies also show that job postings that include salary range not only attract more applicants but more highly qualified ones.
In 2024, Salary Guides are more important than ever
Without candidate pay history guiding salary offers, employers must now rely on current market values when budgeting and pricing for open positions. Take a look at SkyWater’s recently published 2024 Salary Guides. As the largest and most successful executive recruiting firm in the region, we cover all professional sectors and have real-world, real-time knowledge of current employer pay practices and candidate expectations.
As you navigate this new law, reach out to us for insights or guidance. We would love to learn about your business priorities and help you find the right candidate for your team!