The Government’s Proposed Hiring Rules

By: James Flippin · May 12, 2023 · Reading Time: 3 minutes

Is Salary History…History?

In an effort to close pay gaps, the US government announced a proposed ban on salary history questions in its interview processes.

In some cases, salary questions have been used to help employers determine a starting salary for new employees by extending an offer similar to previous earnings. But some argue this practice can prevent workers from earning higher wages for the entirety of their careers.

For clarity, the government is only proposing banning salary questions from its own interview process — not nationwide.

Closing the Wage Gap

Using existing salary to determine future salary is particularly problematic when considered in conjunction with unequal pay practices.

For example, in the US, women on average still earn 17% less than men in the private sector. Similar gaps exist for black men and women, who earn approximately 15% less than white men.

This pay gap is less noticeable in the public sector, with women earning 6% less than men on average. But the government, by removing salary history questions from interviews, evidently aims to eliminate the gap altogether.

What’s Next?

Currently, 21 state governments ban salary history questions or regulate them. If this proposal goes through, salary history questions will be banned at the federal level as well. Salary history bans join the growing legislative push toward pay transparency as major steps toward earning equity and wins for workers everywhere — perhaps even those employed outside the government.

Although these bans do not explicitly affect the private sector, impacts could eventually be felt throughout companies too. If eliminating salary history questions becomes the new norm at the largest US employer — the federal government — it could potentially become a new standard across all employers in the future.

The proposal now faces a 30-day public comment period before it becomes finalized as law.

Looking for more stories like this? Check out On the Money — SoFi’s one-stop-shop for news, trends, and tips!

Check it out

Please understand that this information provided is general in nature and shouldn’t be construed as a recommendation or solicitation of any products offered by SoFi’s affiliates and subsidiaries. In addition, this information is by no means meant to provide investment or financial advice, nor is it intended to serve as the basis for any investment decision or recommendation to buy or sell any asset. Keep in mind that investing involves risk, and past performance of an asset never guarantees future results or returns. It’s important for investors to consider their specific financial needs, goals, and risk profile before making an investment decision.
The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. These links are provided for informational purposes and should not be viewed as an endorsement. No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this content.
Communication of SoFi Wealth LLC an SEC Registered Investment Advisor
SoFi isn’t recommending and is not affiliated with the brands or companies displayed. Brands displayed neither endorse or sponsor this article. Third party trademarks and service marks referenced are property of their respective owners.

TLS 1.2 Encrypted
Equal Housing Lender