Will California Bill Help Eliminate Low-Ball Job Offers?

Asking the salary history of job applicants may become a banned question, but employers could be required to publish hiring rates and stick to them.

This innovative intended regulatory intervention in recruiting practices is a pay equity initiative by (of course) the state of California.

Assembly Bill 1017 (by Nora Campos, D-San Jose), the pay equity law proposed in February 2015, would ban employment advertising that demands salary history from job applicants, and, it would require the minimum applicable hiring rate to be both published and paid or exceeded.

Broad implications for HR

At first, I didn’t dream this idea would survive for long. But the bill is advancing successfully right now. This may be serious stuff, with broad implications for HR.

I really don’t expect it to pass, but it clarifies the growing public annoyance at the systemically discriminatory effects of low-ball job offers that have disproportionate adverse effects on protected classes.

Women are particularly vulnerable to the negative consequences of modest pay histories. Initial comments about the implications have barely scratched the surface.

It could discomfit recruiters but would please applicants. Requiring the employer to share its pay promises should not bother compensation types at all.

Implications for recruiters

For Employment Recruiters, searches may become more laborious when pay history can no longer be used to swiftly discard applicants. Recruiters will have to work harder, interview more applicants and apply fewer heuristic exclusion tools — so the process of elimination will become more difficult.

Fewer people will offer themselves as candidates when the real pay rates are no longer hidden. It will end the status quo that now favors recruiters; they can tailor their referrals towards those applicants with the highest earnings expectations, hoping to pressure the hiring managers to force HR to raise the offer rates, making their searches easier, winning more acceptances and generating higher rewards for headhunters.

It’s harder to recruit people when dangling a low offer than a generous one, and this rule would hang your dirty laundry out for all to see.

Implications for applicants

For Applicants, clear and actual (rather than unrealistic, theoretical) pay expectations will be published. Job seekers can search more efficiently, without wasting time or having their hopes dashed unnecessarily and painfully.

Better to quickly learn that job is not worth landing rather than suffer a constant drain of your enthusiasm as you dedicate precious time and money in a losing cause. If a job opening won’t pay enough to be minimally acceptable, there is no sense in pursuing it.

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The sooner job-seekers stop chasing worthless openings, the more effectively they can preserve their dwindling optimism.

Implications for Comp Managers

For Compensation Managers, well, for a change, government becomes your ally! The external law will force the enterprise to abide by your internal rules.

Compensation need not engage in endless contentious battles with recruiters and powerful hiring managers. No longer will others be able to override your carefully crafted entry hiring rates. The legal requirement to play fair according to your own rules will also strengthen the rigor of your policy standards, giving greater import to careful studies of external competitiveness and internal equity.

Any change to hiring rates will be publicized, thus becoming transparent to current incumbents and easing the otherwise frequently deferred pay reclassification and adjustment procedures. Hiring at any “new higher rate” will compel immediate group adjustments.

Bill would shift responsibility

Yes, it will cost more money in the short-term, but it will save all the inevitable long-term costs from a loss of morale and diminished motivation when companies drag their heels doing what is right. Instead of peers being disgruntled over the hire of a new associate at a higher pay rate, they will rejoice at the ripple effect that raises the grade floor for all of them.

A new California state law could (in this case, at least) shift the responsibility for compensation policy enforcement. It would make compensation administration much more important — and a lot easier.

This was originally published at the Compensation Café blog, where you can find a daily dose of caffeinated conversation on everything compensation.

E. James (Jim) Brennan is Senior Associate of ERI Economic Research Institute, the premier publisher of interactive pay and living-cost surveys. Semi-retired after over 40 years in HR corporate and consulting roles throughout the U.S. and Canada, he’s pretty much been there done that (articles, books, speeches, seminars, radio/TV, advisory posts, in-trial expert witness stuff, etc.), and will express his opinion on almost anything. Contact him at ej.brennan@erieri.com.

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13 Comments on “Will California Bill Help Eliminate Low-Ball Job Offers?

  1. Is this a solution in search of a problem? Maybe I’m biased because we don’t make lowball offers to people that we want to come work with us. It’s bad business to undervalue the person you hope can solve problems and help your organization reach or exceed its goal and objectives.

    Not to mention the free market notion of the salary being a negotiated arrangement between employer and employee. How many people are obligated to accept a job at a rate of pay they find, well, unacceptable?

    It is an unbalanced solution to require the employer to provide data but not be allowed to seek related information in return. Of course, I am not a fan of overly intrusive government regulation of how businesses make business decisions but that is for another discussion.

    1. It is most of the time when job offer ads are demanding from the job seeker provide salary history, but never provide their compensation offers. More and more I see job offers describing what they want from an applicant but never mention what they have to offer. I just became skilled (2 years of experience now) in tagging low-ball offers, scams, and “prospective” offers. And by now, they are in the 60%…and increasing.

    2. As I mentioned over in the CompensationCafe, the poor HR practices of bad actors bring pain upon the righteous. When enough employers misbehave in ways that attract the attention of regulators seeking job security, we all suffer. Yes, lowball offers are destructive, as TNoebel notes, but they still occur. If ignorant shortsighted managers continue such dumb practices, pressure for government intervention will build.

    3. This would not affect your business in the least because you do not low ball. But there are many that do and this would eliminate that situation at least in regards to expectations.

  2. I don’t see this solving any problems. It still states that employers can pay that salary or greater. Therefore, employers will still post their minimum salary offers and wait to negotiate up with candidates.

    1. It’s called competition and supply and demand. It requires the Human Resource department to be creative. I don’t believe it will correct the pay equity issue entirely but at least will address it to a point where expectations have to be met.

  3. But… Don’t you understand?? This is California. This isn’t about solutions. This is about doing “something”. It doesn’t matter if it’s the correct thing. It matters not if there’s a real problem. It only matters that people FEEL good that SOMETHING is being done.

  4. I think it is a fair and good first step in helping people looking for “real” jobs. I would like to see a ban on “prospective” job advertising practices, where some companies are posting job offers when in actuality they do not have any openings. I strongly believe that this practice is cruel for the job seekers,
    To go back to the topic of companies practice of requiring job applicants to reveal their past wages I have this to say: If a company really needs to hire a person, the job applicant’s past earnings have nothing to do with the work he/she are applying for. This amounts to selective discrimination, dear HR.

    1. @Kelly. “If a company really needs to hire a person, the job applicant’s past
      earnings have nothing to do with the work he/she are applying for. This
      amounts to selective discrimination, dear HR.”

      You are absolutely correct! Since it is illegal for any company to give out their employee’s earnings, past or present, to any other company or agency. The question should not be asked, or be required to answer. If a company does not want to waste their time with overqualified employees applying for a specific job then the advertising company should put a salary range for the position.

      When I was looking into my business strategy I always used a highly competitive salary structure for positions I needed to higher. If I couldn’t afford that salary I would have to re-align my strategy to make it fit. I never wanted to have to settle for someone who had the energy but not the business sense. I remember a job offer I received one time that was 20% below my expectations. The company stated that they had an incentive program that would raise their offer for total compensation so that I only received a 15% pay cut. There was no guarantees for the incentive package either. For this company I had already completed a strategic plan to increase their earnings by 20% for the first year. For that company I was by far the best candidate that had applied for the sole reason of having over 20 years of experience in the industry. Needless to say, they didn’t want any part of it. They were willing to settle. I was always brought up with the understanding to never settle for the least. Only settle for the best!

      To this day I cannot figure out why companies are always blaming higher wages for bring down their business but never look at the return for higher wages. They also blame unions for this but this is utterly ridiculous because unions are only in place to hold companies accountable for their actions. Not for higher pay like the mainstream media like to acknowledge.

  5. Kelly’s point about “rusing” being improper is accurate. Although it probably does violate some law, there are some firms that run fake help wanted ads for salary survey information, while others offer jobs they don’t have while merely trolling for candidates they can sell as temp contract workers to unspecified employers elsewhere.

  6. is is the best solution I have heard in a long time. Companies hate pay equity laws but unions love them. Think about this. All unions are set up as equitable pay communities. Pay is not based on your race, gender, and tenure, but it is 100% based on discriminatory factors for companies where there is no union workers or salaried employees.
    The one fight the conservatives have against this is; shouldn’t someone who outperforms another employee in the exact same job be entitled to higher compensation? I say no! For the simple reason; companies are demanding team environments at their workplaces, (at least on paper) so if all of those companies are paying more for god-ism then their reflection to their workers is there is no longer a team environment. I own a business and my whole philosophy to remain sustainable is creating a functional team without egos. To me, if someone wants to hold their pay over my head then I don’t need them anyways, because they do not know the fundamentals of team work. Now, if you want to hold the pay of all of the members on the whole team over my head then I am all for it and will pay according to the team effort.

  7. Where high 5-figure & low 6-figure positions are concerned, CORPORATIONS with 100 employees or more ALWAYS HIRE PEOPLE THAT LOOK & ACT LIKE THE MAJORITY OF WORKERS! First, they need to STOP THE AGE-ISM, SEXISM & RACISM. THEY’RE KILLING THEM! PAY ’90 SALARY + 15YR. INFLATION FACTOR AT 3.5%. OTHERWISE DON’T HIRE THEM ON THE CHEAP!

  8. If you don’t like the salary, don’t take the job. There are a few reasons why they ask these questions though:

    1. More valuable workers tend to be already paid more. Their salary history – while not infallible – at least shows that other companies were willing to pay them well to retain that person’s services.

    2. It helps the company figure out whether or not they can make an offer you might reasonably accept. You are probably not going to be willing to take a pay cut, and may desire a raise if you’re switching jobs. Asking your salary history can very quickly let them know if it’s even worth continuing to bother with you as a candidate. They may have some degree of leeway, but it’s not typically a large amount.

    3. Particularly in most salaried positions, people are not replaceable cogs. If they were, hiring for tech firms, etc., would be very easy; any candidate would do. But since people aren’t the same, it doesn’t make sense for salaries to be the same either.

    If a company is forced to pay everyone the same, and they are going to fulfill the spirit of the law, then they will be forced to decide whether they want to be an “elitist” type company, where they exclusively hire presumably top-performing, expensive workers, or a company that hires less-experienced people/whatever else it can get where the bar is set.

    One other alternative that satisfies the law in letter only, but not in purpose, is to manufacture dozens of individual job titles, so they can still stratify everyone, but also satisfy the law with arbitrarily separated job titles reflecting how much each person is being paid.

    Either way, this would be totally counterproductive and ultimately helps no-one. It might even be enough to force a lot of tech companies out-of-state if it were to pass and be seriously enforced.

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