New England Biz Law Update
The use of previous salary history in determining pay for federal employment offers would be prohibited under proposed regulations released by the U.S. Office of Personnel Management (OPM).
The proposal states that federal agencies would not be able to consider an applicant’s salary history when deciding the salary for new federal employees.
Often, the federal government’s actions as such a large employer set the stage for similar changes in the private sector, making this an important regulation for employers to watch. Several states and cities have already instituted bans on salary history as part of the employment process.
“These proposed regulations are a major step forward that will help make the federal government a national leader in pay equity,” said OPM Director Kiran Ajuja. “Relying on a candidate’s previous salary history can exacerbate preexisting inequality and disproportionally impact women and workers of color. With these proposed regulations, the Biden-Harris Administration is setting the standard and demonstrating to the nation that we mean business when it comes to equality, fairness, and attracting the best talent.”
In an Issue Brief dated March 2023, the Department of Labor found that reliance on an employee’s prior salary can exacerbate pay disparities for any worker who has faced discrimination in the labor market. On the flip side, research shows that salary history bans can narrow the gender wage gap and increase wages and reduce pay disparities for workers of color compared to white workers.
Currently, 21 states have laws or executive orders that address employers’ use of an applicant’s salary history, including bans on evaluating a job applicant’s salary history in setting their pay — similar to the proposed federal regs.
For the federal government’s civilian workforce in 2022, the gender wage gap was 5.6%, down from 5.9% in 2021. The national gender pay gap is higher, measured at 16%. From 1992 to 2022, the pay gap for the federal workforce decreased from 24.5% to 5.6%. And, in recent years, women in the most senior leadership of the federal government receive salaries that are approximately equal to their male counterparts.
