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New California law about asking salary history

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Dave Jensen
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See the article enclosed about a new law -- California the latest, of three or four states passing such laws.

It sounds like a great idea, I'm sure, to job seekers. In reality, I'm very pessimistic. I think this will hurt both companies and job seekers. Companies will be forced to state a "range" for the job, and it will not be the real range, it will be some kind of range that's OK for publication. Then, some job seekers will drop out, and in the old system they would have stayed in the process and negotiate and get a much better deal than what the company now has to quote as "the range."

http://www.sfchronicle.com/business/networth/article/New-law-bans-California-employers-from-asking-12274431.php

Dave Jensen, Forum Founder & Moderator

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(@rlemertmindspring-com)
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Employers and recruiters have access to salary data that the typical job-seeker is either unaware is available or cannot afford to access. I therefore do not see why they would not know what they are going to have to pay to fill their position.

Further, I see almost no benefit to the company to give an inaccurate range. If they list a range that is too high they risk alienating attractive candidates when they tell them "actually, this is all we were planning to pay for this job." If they list a low-ball range, they risk not attracting the kind of employee they're really looking for.

Finally, regardless of any of the above, both parties should base their negotiations on what they expect going forward. The employer is looking to see if the applicant has the skills and ability to do the job at the salary they are prepared to offer. The applicant is looking to be fairly compensated for the skills and abilities they feel they have to offer. One's current salary is, at best, a weak proxy for these skills and abilities.

I've seen the argument made that "but applicants don't always have realistic salary expectations, and we need to know what they make now to be able to determine this." My first response is that this determination should be based on their skills and abilities - and if you can't determine whether or not the candidate possesses those skills and abilities you really shouldn't be in a position to hire them. My second response is "so what?" If their salary expectations are out of line, they won't get interviews and the won't hire anyone - the same way a company won't get any non-desperate qualified applicants if they offer a non-competitive salary.

I've also seen the argument that "this is all well-and-good for an experienced applicant, but it doesn't really apply to someone seeking their first position. Besides, everyone knows that a post-doc or graduate student stipend is artificially low." I don't buy these arguments either. If you already know the numbers are meaningless, then why do you need them? What information do they give you that you cannot get in much better form by talking to the post-docs PI?

The bottom line, for me, is that we wouldn't even need to be discussing this or enacting laws regarding the question if everyone was focused on the only two questions of importance: is this person capable of meeting the responsibilities of this position, and is he willing to do so at a price we are willing to pay.


   
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Dave Jensen
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Great post Rich. Well thought-out. If I have the time tonight or soon, I'll post a couple of counterpoints to think about. But your argument is a good one and I wouldn't disagree with your major points.

Unfortunately, I know what will happen. In fact, I can forecast it exactly.

HR departments will come up with a "range" if someone asks, and those who know how to negotiate will bust it wide open.

Those who don't will get "offers in our range." It leads to the same-old situation. In other words, a discrepancy between those who can, and those who can't, or those who think they don't need to push, and those who will push, etc. This is just another needless regulation, from legislators who think regulating our every action is the best approach.

Dave

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DX
 DX
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Hi -

If employers are to post a range, than I think it will be fairly accurate on what they want to offer in my opinion.

Usually when the Company has take a decision to hire a Person, they have already decided from a Budgeting Point of view what their target salary is and they have a range surrounding that in their finanical Sheets.

By the time finance and legal has signed off on the request to fill a Position to HR with sign-off also from the Hiring Manager, the HR will know what salary range they're working with when it Comes finding and processing candidates. So basically, the range is known before Hand. So if they do post the range its fairly accurate.

Now the caveat here is that i'm being established pharma specific, usually the salaries and ranges are bench-marked to the Market they choose to base value on for the position (so call Fair Market Value for the industry sector). And before a Position is approved to go to candidate search Phase, there are alot of sign-offs as noted above, I can't speak for start-ups or other sectors.

I do think the candidate does benefit in that regard, so they know what they're getting themseleves into before Hand -

HOWEVER - this does not mean that there is no negotiating room! In some circumstances - if you're good at it you maybe able to negotiate out side that range - provided that 0 you are a Talent that the Company want's to go for. IN the back in if they agree to go above the range that's in the finance Sheets for the FTE then the Hiring Manager will have to go to HR and Finance and Legal to get that signed off, i.e. go to bat for you.

Personally, I like the fact you don't have to disclose the salary range because far to often compnanies like to hold that agaisnt you irresepective of negotiating skills particularly if they can get away with the low end of the range. I think the if you know the range that you're in with the employer the then conversation easily transitions more to what Rich said, Focus on the skills and then if there is mutual Agreement on the Price tag.

And yes Dave, if the published range is too low and applicants don't apply, what's wrong with that? The applicant is empowered to say no and search elsewhere, HR and Company don't waste time with processing candidates where expectations are not aligned.

DX


   
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(@rlemertmindspring-com)
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Great post Rich. Well thought-out.

Thanks.

Unfortunately, I know what will happen. In fact, I can forecast it exactly.

HR departments will come up with a "range" if someone asks, and those who know how to negotiate will bust it wide open.

This is true regardless of whether or not you know the candidate's current salary, and is a strong argument for the candidate doing their research to know have some idea what the market rate is for that position. I would further argue that the "anchoring" principle can come into play when the candidate is required to give their current salary. It's not so much that the company is intentionally trying to "low-ball" the applicant as it is the current salary sets an anchor point in everyone's mind.

This is just another needless regulation, from legislators who think regulating our every action is the best approach.

Most regulations are just putting into law what people should be doing anyway.


   
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Dave Jensen
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Most regulations are just putting into law what people should be doing anyway.

In California, most regulations are just putting into law what the government thinks you should be doing, but people will largely go on doing what they were going to do anyway. Ever been to a Starbucks in CA? They all have the same warnings about carcinogens that you find on a gas pump. The end result is that all such warnings are ignored because everything has a warning on it. I think the current regulation is similar - good intention, and makes us feel like we are "doing something", but won't actually have a meaningful change.

My feelings exactly.

Dave

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(@rlemertmindspring-com)
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Ever been to a Starbucks in CA? They all have the same warnings about carcinogens that you find on a gas pump. The end result is that all such warnings are ignored because everything has a warning on it.

Not really the best example you could have used. The law requires the carcinogen warnings to be posted, and that is being done. Whether anyone pays attention to the warnings, the law itself is not being ignored.

Similarly, the "current salary" law does not prevent job seekers from providing their current salary. It only says that employers cannot ask for the information - just as they cannot ask for one's marital status.


   
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Dave Jensen
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Lydia,

I don't get from your post about how it's going to "weed out lazy or inept recruiters" . . . Recruiters, or anyone (hiring manager, HR, etc) now just have one more question they can not ask. And lawyers have one more area to go for lawsuits.

What it will do for recruiters (in the short term) is make them more important to their clients by helping them through the negotiation process. Because there will be a lot of people who completely disregard the "range" -- and (probably rightly) think they can negotiate out of that range. So, if I tell you it's a job that pays between $80 and $100K, and you are presently earning $94K, you'll have to decide whether you'd put your hat in the ring for what will clearly be a lateral move at the best. On the other hand, there will be people who will assume -- "OK, that's the range for everyone else. I'm worth more than that" and they earn $94K now and would only take an offer of $105K+.

And because the company is still free to negotiate ABOVE the quoted range, that's fine. But what it does is eliminate the negotiating wimps. It does not eliminate the recruiter. People supporting these kinds of laws must recognize that it only forces companies to downgrade salary ranges for advertising purposes -- or, to post positions that can be upgraded to the next job category above it, because that's where the savvy negotiator will end up.

Dave

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(@rlemertmindspring-com)
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What I see you saying is that companies are going to "low-ball" applicants regardless, and if they can't do it by finding out what you're making now they will do it by advertising a salary that's below the fair-market value for that position. In either case, why would someone want to work for that company? You at least have a fighting chance when they 'downgrade' the position because you can determine for yourself whether or not the stated range is fair or not.


   
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 PG
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I know that I am in a very different Environment for this type of discussions were salary history is not necessarily easy to find but at least available in the public domain. Still I have a hard time seeing how it would normally cause a problem.

The only specific situation that I have seen when this has been an issue is when an applicant that used to make Close to 150k USD/ year applied for a position paying 80k USD / year. The Company that he applied to then became hesitant to make the hire assuming that he would be unhappy and soon want to leave again. In this case the candidate had made an informed choice and wanted to go to a different type of position that he was aware woudl bring a lower salary.

Normally as a hiring manager if I am looking for someone to work in position x and I have a salary range in my team for similar positions that is 80-100k I want to hire the new person within that range and preferably at a level within that range that I can motivate. If I hire someone with a lower salary that person will be unhappy, potentially leave the Company or at least require an adjustment.

If I pay that person above the range other team members will be unhappy and a similar scenario but at a larger scale will happen.

To go through the troubles it brings to hire someone with an incorrect salary to potentially earn 5-10k / year just doesnt make any sense to me. If I apply this to Swedish conditions were the salary structure is a lot more flat it makes even less sense since we are talking about less money / year.


   
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Dave Jensen
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What I see you saying is that companies are going to "low-ball" applicants regardless, and if they can't do it by finding out what you're making now they will do it by advertising a salary that's below the fair-market value for that position. In either case, why would someone want to work for that company? You at least have a fighting chance when they 'downgrade' the position because you can determine for yourself whether or not the stated range is fair or not.

Rich, you've misunderstood or I didn't do a good job communicating, because that's not what I meant. First off, I don't think anyone is going to be advertising salaries. If a company went through all the manipulations you suggest above, than I would not want to work for them either. It's human nature, however, for the best candidates to assume that they are worth more than the numbers they get when they ask HR what the salary range is. It's also human nature for the manager who wants to hire that person to do whatever it takes to bring them on board. That likely includes busting out a new pay grade for the hire, or changing the job specs in some way to make it completely legal. There are so many loopholes in this -- it's disgusting.

People will play these laws like a fiddle, and they will do absolutely nothing to limit the playing field except make the "bulk" of the applicants believe that negotiation no longer counts. When people stop negotiating, companies win -- not employees.

Laws like this remind me exactly of the government "Do not call list" law that was such a big deal a decade ago. It was going to stop your phone from ringing with needless marketing calls. Now, we get a half dozen a day -- why? Because it's a worthless regulation applied on a "who cares" marketplace. Same here . . . All the company wants is the best person available. They'll wiggle their way through new regulations and in five years it will be exactly like it is today . . . he who negotiates, wins. He who doesn't gets the booby prize, which in this case is a salary in the stated range.

Dave

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(@rlemertmindspring-com)
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It's human nature, however, for the best candidates to assume that they are worth more than the numbers they get when they ask HR what the salary range is. It's also human nature for the manager who wants to hire that person to do whatever it takes to bring them on board. That likely includes busting out a new pay grade for the hire, or changing the job specs in some way to make it completely legal. There are so many loopholes in this -- it's disgusting.

So how does knowing one's current salary help this?

People will play these laws like a fiddle, and they will do absolutely nothing to limit the playing field except make the "bulk" of the applicants believe that negotiation no longer counts. When people stop negotiating, companies win -- not employees.

First, I don't see why this law is going to change the way people negotiate salaries. You've already said most people don't negotiate now, so what's going to change? And how does being forced to divulge your current salary help the situation? "Why do you think you're worth $105k when you're only making $80k now?"

After giving the matter some thought I wonder if we're actually arguing two different things, so let me ask you two questions:

1) Do you, or do you not, feel that one's current salary is irrelevant information in the hiring process?

2) Is your objection to the new law because it prevents you from asking for this information, or is it based solely on a general distaste for government regulations?

My comments in this discussion are based on my opinion that current salary is irrelevant when seeking a new position, and that the question is too often used to justify a low salary. (I believe I've already mentioned the "anchoring" effect.) It would be nice if we didn't have to codify things, but the law was not enacted in a vacuum.


   
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Dave Jensen
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Rich,

You can ask about present comp all you want right now, and I don't think it makes much difference at all. My advice has always been that if you're a new grad or postdoc, you just share your present salary because everyone knows and expects what it might be anyway. More senior people should probably stay closer to the chest. But, no one should ever share salary "expectations." So that advice doesn't change -- except that employers can't ask the "what do you earn now" question.

I don't see anything in these rules prohibiting the company from asking "What are your compensation expectations?" -- In a typical scenario, the answer would be, "Well, what is the range?". . . then the company says "The range is $80K to $100K. What are your expectations (repeated)?" The best answer seems like mid-range, so you say "90K." And they interview you and offer you the job at $90K.

The above scenario will completely zap the negotiation process, and most people will be lulled into the "wait and get offer at mid-range" process.

In actuality, the company had a Research Scientist position advertised -- one that could easily be upgraded to a Senior Scientist position based on the candidate. The next person comes in they go through the same exchange. Expectations? No reply, but the question about range. Instead of replying with mid-range, this person decides to negotiate.

Out comes the Senior Scientist position and discussion resumes.

Yes, Rich, I think that regulations like this stink. This is only one of the many games I can think of that can be played to get around these new laws. Laws like this make sure that all sheep will be paid fairly. That's fine, but the sharks will still win.

As a young job seeker, I was a sheep, for sure. And I got sheared a couple of times because I didn't get the rules that guide the job seeking process. Thanks to forums and Internet media like this site, people can see how others have managed these discussions before them.

Dave

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DX
 DX
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HI -

I'm reminded why I like Government Jobs. Salary linked to Job Level/grade is public, published and nearly non-negotiable. So you apply knowning basically what you're going to get and well Uncle Sam knows what they are able to pay, so its about the Knolwedge, Skills, and Experiences as the the Basis for application, selection, interview and offer.

Of course not applicable to Jobs where a civil service examination serves as the great equilizer for a Job with established, non-negotiable job-grade and salary. So at least you know the salary you get if you pass the exam and meet the selection score threshold for being called in.

So at least salary wise, well discussion is quite easy I guess. So anybody got a nice cushy Government Job where I can be considered Retired while on-Active Duty? (i.e. do nothing and get paid?) - US Post Office is my first choice.

Best,

Dx


   
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