If you’re unfamiliar with recent changes in California law around compensation, this article is a good starting-point. Though Amazon isn’t directly affected by California AB-168, they have stopped asking for salary history from candidates. From my perspective, this is both very smart of Amazon and very cool. Of course I say this as CEO of a California company.
If you’re in California, you don’t need to be an Amazon-sized company to feel the effects of AB-168. This law affects all California companies, or companies that recruit in California. Even tiny little startups need to adhere with AB-168, which came into effect January 1 to help achieve pay equity. No matter what kind of company you are, your stage, or your size, you can no longer ask for a candidate’s salary history. Just don’t ask.
You may be thinking, “But wait! How do I know how much to pay if I can’t ask what they make now?” I have an answer for you. Plan for the role, not for the specific candidate.
I wrote about some of this last year in this article, so you may want to swing back and read through that. Before you start hiring, you should have to think about levels and expectations for the role. What are you hoping this person will be able to provide for your organization as you grow? What are your expectations for say the next engineer joining your team? Will your first full-time Customer Success person also need to be build out the team from scratch? Before you fall in love with a specific candidate, you should have have a relatively clear idea where the gaps are in your organization. Consider how different candidates could fill them.
If you’ve struck startup-hiring gold, and have found someone who can do more than one kind of function depending on what’s needed — congratulations! But your perfect candidate’s flexibility doesn’t let you off the hook. You still need to put some thought, energy, and focus into how you generally expect them to spend their time, what this role might compare to in another company... and what is appropriate pay for the work and impact a successful employee would have in this job.
Also, think about pay ranges for the role. Pay ranges (sometimes called salary ranges, depending on the role) are your friend. Ideally, you’ll even take a bit of time to create your bands and ranges before you start recruiting for a specific role! (Yes, I’m also a startup founder and I know that it doesn’t always go down this way - but it’s good to know what we’re aiming for!) Plan for the value of roles to your company, before you overlay how a candidate aligns with those roles.
Your hiring managers, recruiters, and interviewers will get questions about compensation. Train them to navigate these and how to route them. Make sure your team understands that salary history is off the table in interviews. Sometimes, a candidate may volunteer information about salary history. You'll need to be certain that the hiring manager (or whoever builds the offers) doesn’t use this information for an offer.
As a hiring manager, here’s a question you can ask: “What are your salary requirements?” It’s completely okay to ask what a candidate is looking for. But it's not okay to key off their salary history as a guideline for your offer.
If a candidate asks you to provide the pay range for a role, you are now required to share that information with them. The law states:
an employer, upon reasonable request, shall provide the pay scale for a position to an applicant applying for employment.
Because it’s upon “reasonable request,” you don’t need to, say, post all the salary ranges within the company. You don’t even need to post the ranges for the job opening, but you will need to provide them to the candidate upon request. Be prepared to answer the question from your candidate. It may be that every interviewer won’t be “in the know” about salaries. Train your interviewers to refer these questions to the recruiter or hiring managers.
It may be tempting for some companies to dig into the word “reasonable” to avoid sharing their ranges. There’s a longstanding desire for secrecy in some companies when it comes to pay ranges. This kind of openness with a candidate may be a big change for those organizations. I absolutely do not recommend trying a tricky dodge. Having a plan and executing it well is a far better approach when it comes time to talk about compensation with a prospective employee.