Should You Ask Candidates About Their Salary History?

How do you define a salary for a new employee? Do you have a robust system of salary bands that sets the criteria for their role and level? Or, do you ask candidates what they’re currently earning and make an offer based on that figure? 

As of 2024, a total of 22 US states have implemented bans on asking candidates about their salary history. This practice is still mostly allowed in Europe — although as we’ll see, that’s about to change. 

In this article, we’ll explore some compelling reasons why asking candidates about their salary history might not be a good idea. We’ll also talk about what will change in Europe once the EU pay transparency directive comes into effect. 

‍

Why (some) employers still ask about salary history 

‍

We’ll come straight out and say it: at Figures, we think asking candidates about their salary history is an unfair and outdated practice that needs to stop. But, in the interest of balance, let’s take a look at some of the reasons why companies say they ask candidates to share information about their previous compensation. 

‍

Helps to determine candidate quality 

Some employers worry that without this question, they’ll end up selecting lower-quality candidates, leading to poor job matches and high turnover. But here’s the problem with that argument: a good recruiter or hiring manager should be able to figure out a candidate’s suitability for a role through normal selection processes, including interviews and assessments. Asking about salary might seem like a useful shortcut, but it may not be useful if an employee has previously been under or overpaid. 

‍

Helps to gauge market value 

Another argument is that asking about salary helps to determine what a candidate is ‘worth’ on the market. But again, this idea doesn’t stand up to scrutiny, because a sample size of one simply isn’t enough to establish the market value of a role (we’ll discuss what to do instead further on). Plus, employees might be underpaid for a variety of reasons — and using this to justify paying them less is simply unfair.

‍

{{cta}}

‍

Tells a story about the candidate’s career trajectory

Employers typically want to see a track record of steady, regular increases that represent the candidate’s progression throughout their career. Here’s the problem though: there’s no need to ask about salary history, because you can easily figure this out from a CV. After all, the whole point of this document is to provide a step-by-step account of the candidate’s career so far. Why bring salary into it?

‍

Saves time for employers and applicants 

Lastly, many employers argue that asking about a candidate’s past salary can save time by establishing their expectations early on. That way, if your expectations aren’t aligned, you can simply end the process and avoid wasting time for everyone. This is a logical argument — until you remember you can simply ask candidates about their salary expectations instead. Even better, include a salary range in your job ads, and let candidates decide for themselves if the opportunity is a good fit. 

‍

{{cta}}

‍

5 reasons not to ask candidates about salary history

‍

As we’ve said already, we don’t think employers should be asking candidates about their compensation history in 2024. And we’re not alone: a Fawcett Society survey of 2000 employees recently found that 58% of women and 54% of men felt that salary history questions meant they were offered a lower wage than they would otherwise have been paid.

Given the wider conversation about fair pay, pay equity and pay transparency we’ve been having over the past few years, it’s not surprising that asking about salary history has become an unfashionable concept. Here are a few other reasons why it’s a bad idea. 

‍

1. Gives employers an unfair bargaining advantage 

Let’s face it: employers already have the upper hand during salary negotiations, because they know how much they’re willing to pay. Asking candidates about their current or past salary puts employers in even more of an advantageous position. 

Plus, it’s important to consider something called anchoring bias, which suggests that employers are overly influenced by the first number on the table. If that number is the employee’s current salary, this could lead to them making an offer that’s lower than they initially intended.  

‍

2. Can lead to the wrong conclusions

The recruitment process is a complex set of steps designed to test candidates against each other and ultimately find the best person for the job. But employers that routinely ask candidates about their salary history may rely on this information rather than designing proper assessments. This can lead to inaccurate assumptions about candidates based on their pay history, not their skills and experience.

‍

3. Perpetuates existing pay inequities 

Just because someone has been underpaid in the past, that doesn’t mean they deserve to remain in that situation forever. But if you’re basing offers on a candidate’s previous salary, those who have previously been treated unfairly will simply never catch up to their peers. 

This is an even bigger issue when we consider that certain groups of employees are much more likely to be underpaid than others. For example, research from Stanford University found that women in tech and engineering were paid an average of 6% less than men for their first jobs. Basing compensation for new employees on their previous salaries only worsens this gap over time. 

‍

4. Might not produce useful information

In a 2021 survey, 39% of employees who had been asked about their salary history said they had lied about it when asked. While this may not paint those candidates in a great light, it does make sense. After all, if a candidate suspects that they’re currently being underpaid, there’s no incentive for them to be truthful. 

‍

5. Sets the wrong tone 

These days, employees are aware that asking about salary history is no longer common practice. That means that even asking this question could be seen as an attempt to lowball them. Put simply, this is just not a good way to start a relationship with a new employee, which should be based on trust and respect. 

‍

{{cta}}

‍

Asking about salary history will soon be illegal in Europe

‍

The EU pay transparency directive was approved by the European Parliament and Council in 2023, and member states now have until June 2026 to transpose the rules into national law. Among other measures related to pay transparency and fairness, the directive includes a ban on asking about salary history.

So if this practice is about to be illegal anyway, why are we talking about it now? Well, for one thing, the directive will be upon us sooner than we think, and it’s always best to be prepared. 

But for now, there’s also a competitive advantage to be had by companies who voluntarily stop this practice early, if they haven’t already. After all, telling candidates that you don’t base pay on previous compensation sends a clear message that you care about paying them fairly and competitively — not as little as you can get away with. 

‍

What to do instead of asking about salary history 

‍

We hope we’ve convinced you that asking candidates about their salary history is a bad idea. But the reality is that it doesn’t really matter, because the upcoming EU directive means employers in Europe soon won’t have a choice. 

So, what can employers do to understand the quality and market value of the candidates in front of them and determine the right salary to offer? Here are a few ideas: 

• Ask about salary expectations instead: Asking candidates what they expect to earn in a new position is still within the new rules. However, we recommend caution if you take this approach, because some groups may undervalue themselves. For example, one study of salary negotiations showed that women asked for (and got) 30% less than men on average. 

• Share salary ranges with job applicants: A better idea is to share a salary range with candidates as early as possible so they can assess whether the job is aligned with their expectations. Once the EU directive comes into effect, this will be required for all employers — so you might as well get used to it now. 

• Benchmark salaries to determine market worth: Figuring out a candidate’s market value is another reason employers give for asking them about their pay. But employees can be underpaid or overpaid for a variety of reasons. Conducting salary benchmarking to establish the median salary for each role is a much better alternative. 

• Use salary bands for fair pay decisions: Lastly, there’s no need to ask about salary history if you already have a clear idea of what each role is ‘worth’ before you make an offer. And one of the most effective ways to achieve this is to implement a robust salary band system that provides a framework for all compensation decisions within your organisation. 

‍

Learn more 

‍

Want to learn more about pay equity, fairness, and the EU pay transparency directive? We’ve got you! Here are a few articles from our archive to get you started: 

• The Clock is Ticking on Pay Transparency: Here's How to Prepare
• Exploring Pay Transparency Legislation Around the World
• Preparing for Pay Transparency: 6 Key Insights From Our Webinar
• Demystifying Pay Transparency: The Complete HR Professionals' Guide
• 6 Reasons You Might Be Paying Employees Unfairly (and What To Do About It)