Latest / Hiring & Firing with Fexingo: Recruitment, Performance, and Workforce Decisions / How a Salary History Ban Changed Hiring Outcomes
Transcript
- Lucas: So there's this policy that's been quietly spreading across state legislatures, and a new study just gave us the clearest look yet at what it actually does to hiring. I'm talking about salary history bans. And the numbers from one large retail chain are pretty striking. Luna: Right, because a few states have had these for a while, but I feel like the data has been murky. What did this study find? Lucas: Yeah, so the study looked at a chain with over 30,000 employees. After they removed the salary history question from their application, offers to women and underrepresented candidates went up by eleven percent. And here's the kicker — their time to hire didn't budge. So they didn't sacrifice speed for fairness. Luna: Eleven percent is not nothing. But how do we know it was the ban and not some other change they made at the same time? Lucas: Good question. The researchers controlled for other hiring process changes, and they compared locations in states with and without bans. The effect was concentrated in the states that had the ban. They also saw that the biggest shift came from candidates who previously might have been screened out early because their salary history didn't match the range. Luna: So it's not just about negotiation, it's about who even gets to the table. Lucas: Exactly. And that's the part that gets lost in the policy debate. The anchor matters, but so does the filter. When you ask for salary history upfront, you're not just setting a baseline — you're potentially excluding people whose past pay doesn't reflect their potential. The ban forces you to think about the role's actual value. Luna: And there's something else. A lot of these laws came in after the push for pay equity, but they're not just about gender. They can help anyone who's been underpaid in a previous job, which often hits marginalized groups harder. Lucas: Right. And the interesting thing is how the conversation shifts internally. Companies that adopt this often find they need to define a salary range before they even post the job. Which, by the way, is a practice I think we should all get behind. It forces you to do the market research and decide what the role is worth. Luna: That sounds like a good habit regardless of the law. But I'm curious — do these bans actually change what happens in the offer stage? Because I've seen hiring managers try to work around it by asking 'what are you looking for?' or 'what did you make at your last job?' in a different way. Lucas: That's the loophole problem. Some states have closed it by banning not just the question, but also the reliance on third-party data or even the discussion of salary history if it comes up voluntarily. But the more interesting fix is training. You have to teach hiring managers why the ban matters, not just that it's against policy. Luna: And what happens if a candidate volunteers their salary history? Do you have to ignore it? Lucas: In a lot of jurisdictions, you're not allowed to consider it. So the practical advice is to gently steer the conversation back to the role's range. You can say something like, 'Thanks for sharing, but we're focused on what this role pays and your fit for it.' It's a bit awkward, but it keeps you compliant and also reinforces the message that you pay for the job, not the person's past. Luna: That makes sense. You know, this whole thing reminds me of something I read about the anchoring effect in negotiations. If you never hear the first number, you can't be anchored by it. But if you don't ask, and the candidate has a number in mind, doesn't that still anchor them? Lucas: Oh, absolutely. The candidate might anchor themselves. But the key is that the employer shouldn't be the one setting a low anchor based on a number that might not even be relevant. By publishing a range, you're setting the anchor in a more transparent way. And the data from this study suggests that when you do that, the final offers are more equitable. Luna: And I guess it also cuts down on the anxiety that candidates feel. You know, the whole 'if I say a number too high, I'm out, too low, I'm leaving money on the table' thing. It levels the playing field a bit. Lucas: Yeah, and that's a real cost. I've seen talented people drop out of processes because they were afraid to negotiate, or they were embarrassed about their current salary. The ban removes that barrier. And it's not just about fairness — it's about access to talent. If you're a company that wants to hire people who've been historically underpaid, you're actually at an advantage if you don't ask. Luna: Before we go further, I want to say something because this conversation is exactly why we do this show. You know, we're able to keep these episodes ad-free and dig into the data because some listeners support us directly. If these conversations have helped you think about your own hiring practices, or maybe even challenged something, and you're in a position to help, you can support us at buy me a coffee dot com slash fexingo. It's a simple way to keep the lights on, and it genuinely means a lot. Lucas: Yeah, and we don't mention it often, but it does help us keep the research deep and the episodes practical. Thanks for those who've already chipped in. Now, back to the study — because there's a really interesting wrinkle about how the ban affected internal mobility. Luna: Oh, I didn't see that in the summary. What happened? Lucas: So they also looked at employees moving within the company. After the ban, internal transfers saw a jump in starting pay for women, too. Because before, if you moved to a new role, the offer was often based on your current salary, which might have been low due to historical inequities. The ban forced them to use the role's range, and that closed the gap. Luna: That's a hidden benefit. It's not just about external hires, it's about fixing internal pay compression. Lucas: Right. And it also ties into something we've talked about before on the show — the idea that a bad process can perpetuate systemic issues without anyone intending it. No one at that retail chain set out to underpay women. But by relying on salary history, they were baking in the past, including all the biases that shaped it. Luna: So if a company wants to adopt this voluntarily, where do they start? I imagine it's not just deleting a field from the application. Lucas: No, definitely not. You have to do a few things. First, scrub every place where salary history might be collected — application, interview guides, even informal conversations with recruiters. Then, you need to train your hiring team on how to handle the inevitable question or volunteer. And finally, you need to define salary ranges for every role, before you even start recruiting. Luna: And what about the argument that this makes hiring harder because you don't know what someone will accept? Lucas: That's an interesting one. The study's data suggests otherwise. time to hire stayed flat, and acceptance rates didn't drop. Candidates are used to ranges now. In fact, I'd argue that publishing a range builds trust, and that can actually speed up the final stages because you're not going back and forth on salary. Luna: But don't some candidates still try to negotiate above the range? And then you're back to anchoring games. Lucas: Sure, but you can handle that by being upfront: 'The range is firm, and here's where we'd place you based on experience.' And if someone pushes beyond, you can explain the pay philosophy. The point is that the range is the anchor, not the candidate's history. That's a more honest conversation, and it usually leads to a fairer outcome. Luna: I also wonder about the legal landscape. Which states actually have these bans? Lucas: As of mid-2026, about twenty states and several cities have some form of salary history ban. The specifics vary — some only apply to public employers, some have enforcement mechanisms. But the trend is clearly moving toward more transparency. There have also been federal proposals, though nothing has passed yet. Luna: So it's not just a coastal thing. It's spreading. Lucas: Right. And the study we're talking about is one more piece of evidence that these bans don't hurt efficiency. In fact, they might help companies attract a wider pool of talent. In a tight labor market, that's a competitive advantage. Luna: And yet, I bet there are still plenty of hiring managers who privately think it's a hassle. How do you get them on board? Lucas: You show them the data, like we're doing today. And you also point out that relying on salary history is lazy. It's an easy shortcut that can lead to bad outcomes. And if you're in a state without a ban, you can still adopt it as a best practice. Some companies do it because it's the right thing, others do it because it's good for business. Either way, the results are the same. Luna: So what's the one thing a listener should take away from this episode? Lucas: That the salary history question is not just a neutral fact-finding step. It's a tool that can quietly lock in past inequities. Removing it forces you to think about what a role is worth today, and the data shows that leads to better outcomes for candidates and no downside for companies. If you haven't looked at your own process, it might be time to ask: do we really need to know that? Luna: And maybe the answer is no. Thanks for digging into this, Lucas. Lucas: Thanks, Luna. And thanks to everyone who supports the show. We'll be back next week with another deep dive.