States and Cities Set Sights on Curtailing Wage Inequality

The gender pay gap has been a topic of concern for quite some time now. Recently, more state and local governments have joined the effort to combat wage inequality using new regulation. Coming in the wake of the growing ban the box movement that has seen legislative success in many places across the U.S., lawmakers have begun targeting what they say is one of the notable causes of the pay gap: the consideration of salary histories. From California to Connecticut to Illinois, there are fresh and successful efforts to restrict access to this information.

For many employers, payroll equals a substantial percentage of operating  costs,  and making decisions on employee compensation can directly impact net income. To that end, when determining what salary to offer to a prospective new hire, some employers will require the applicant to disclose their pay rates in prior job roles. In other cases, they may discover this information through a background check. During an employment verification check like the one provided by backgroundchecks.com, salary data appears if disclosed by the business. Curtailing this process has become a goal of the fair wage movement.

The reasoning behind advocating for pay equity by targeting the use of salary information is as follows. Women, who are typically paid less than men, can easily become locked into a cycle where they are consistently underpaid. Even when moving to new positions, their salary history, often lower than a man's, will influence an employer to offer them less money than they would offer to a man for the same position. By eliminating the ability to ask for or consider this information, applicants may be more likely to receive fair value for their  labor .

In Connecticut, Governor Dannel Malloy signed a new law in May banning employers from asking about salaries during the hiring process. However, the law did not restrict considering such information if uncovered through secondary means like a background check. San Francisco not only banned salary questions but also prohibited businesses from sharing salary info without explicit consent from the employee. 

San Francisco's law makes it clear that criminal background checks remain appropriate to use for employment purposes. For such services as backgroundchecks.com's Employment Verification, usage by employers is still acceptable — but if salary information appears, businesses must ignore it.

The Illinois Senate recently passed a bill to introduce similar equity regulations; it is still in the legislative process. Hawaii sent a bill to its governor for consideration in early May. While some legislators, like those in New York, have also worked to expand restrictions to include credit reports, these efforts have seen limited success.

These new regulations add an extra layer of complexity to hiring decisions for employers. backgroundchecks.com stays up to date on all the latest developments around the country, providing criminal history checks, credit reports, and other services in line with all applicable laws. As additional states look to equalize the playing field for their citizens, compliance in these areas will grow in importance.