Amazon bans salary history questions during interviews: Why Finance should care

If your interview process still involves asking questions about candidates’ previous salary history, you may want to consider making some changes to that process. 

Amazon just announced an internal ban against asking job applicants about their previous salary history, joining other tech giants like Facebook and Cisco.

The ban, which was posted in its entirety on BuzzFeed News, states that hiring managers and recruiters can no longer:

“directly or indirectly ask candidates about their current or prior base pay, bonus, equity compensation, variable pay, or benefits.”

In addition, managers and recruiters can’t:

“use salary history information as a factor in determining whether or not to offer employment and what compensation to offer a candidate.”

May not be optional soon

Smaller companies may be asking, “We don’t compete with Amazon, so why should we care what they’re doing?”

There are several reasons why employers of all stripes should care.

For one thing, when giants such as Amazon and Facebook make major HR-related changes, those changes often wind up becoming trends embraced by the rest of corporate America.

Plus, soon employers may not have a say on the matter. A number of states and cities have enacted specific laws that prohibit salary history inquiries during the job-application process.

California, Delaware, Massachusetts, Oregon, New York City, Philadelphia, Puerto Rico and San Francisco have such laws on the books. Plus, Idaho, Maryland, New York, Rhode Island, Texas and Virginia are considering similar legislation.

Why the ban is necessary

Although Amazon, which is based in Seattle isn’t currently headquartered in a city or state that prohibits salary inquiries, the company said it was taking a “proactive stance” on the issue and such a move will help to close the pay gap.

Equal pay has become a huge workplace issue in recent years, and removing salary inquiries from the hiring process has widely been accepted as a proven way to achieve equity.

Here’s why: When a company knows how much an applicant is currently making, it’s much easier to figure out the lowest possible offer that hire will accept. This often results in already underpaid women and minorities continuing to be underpaid in their new positions.

By removing prior pay history questions from the hiring process, that cycle of underpayment should correct itself, proponents of these laws say.

The trend of salary history bans is only going to increase. So forward-thinking companies can make changes to their own internal policies now and avoid rushing to do so when their state and/or city requires them to do so.

This story was originally published on our sister website, HR Morning.