Lynne Anderson Comments on Pay Equity Proposal With Law360

In “Feds’ Pay History Proposal Sends Signal To Private Employers,” Law360 turned to labor and employment partner and gender and pay equity team leader Lynne Anderson for her commentary on the United States Office of Personnel Management’s (OPM) proposed rule that would largely bar federal agencies from asking job candidates for salary history information and would require agencies to have explicit policies about how they set pay based on an applicant’s previous federal salary.

Anderson said the OPM’s proposed rule follows a trend over the past few years in which numerous states and municipalities have prohibited employers’ salary history inquiries.

“The rule is comparable to a lot of the existing laws that are on the books in states, cities and even some counties in terms of banning the use of salary history to make salary determinations,” Anderson explained. “There [are] variations in these different laws, but the premise is the same — that you shouldn’t rely on someone’s prior salary history as a reason to set their incoming salary.”

Anderson noted that some jurisdictions effectively dipped their toes in the water on the issue by first passing laws that outlawed those types of inquiries in the context of public employment before later extending the policies to cover private businesses. A similar chain of events could play out on the federal level, she added.

“With the federal government, I think stage one is, ‘We apply it to federal employees. Stage two is, ‘We get acclimated and then [apply it] to private employers,’” Anderson said.

“Even if you’re in a state that doesn’t have a per se salary history ban, if you are challenged in a discrimination lawsuit or if you’re challenged in an agency action for unfair pay or pay discrimination, you’re going to need to defend [how] you’ve set pay,” Anderson commented. “And if the reason you set pay is because … a white man earned more coming into the job than a comparably experienced Black woman, [it will be] really hard to defend that pay disparity.”

Anderson noted that companies basing employees’ pay on their salary history “is going to become increasingly difficult” as a way to defend against pay bias lawsuits by workers or by government regulators. Aside from legal considerations, a person entering a company at a significantly higher pay rate than their peers simply because they earned far more at their prior job can create problems within the workforce around the issue of equitability, she added.

Anderson said her recommendation is, “Salary history doesn’t really serve your business objectives, nor does it serve your legal objectives, especially in this new world of pay transparency.”

The full article is available for Law360 Employment Authority subscribers.