Friday, August 15, 2014

Ask The Expert: Pay Negotiation Strategy

A few years back we had some really amazing questions for our Ask The Expert series. Astron Solutions' Founding Partner and Managing Director, Jennifer Loftus, is our resident expert and gave some sage advice to those who submitted questions. Well, we received another one and Jennifer once again came to the rescue. The question was: "Is it appropriate to ask someone you are in salary negotiations with (a senior-level position) to prove what their previous salary was (either through a W2 or paystub)?" Here's what Jennifer had to say:
Salary negotiations – always a delicate topic! The prospective employee wants to maximize his / her total rewards income, as the potential employer wants to compensate fairly and in a budget sensitive manner. Even talking about salaries may be difficult for some candidates, while others provide a robust salary history in an attempt to build for the future.

The way the current “Ask the Expert” question is written, it sounds like the person asking is the one doing the interviewing for his / her employer. I know of several organizations that ask candidates to prove their current or past salaries by providing W-2 or paystub documentation. This practice is not illegal under federal law. However, different states have different labor laws, so please check with your state’s Department of Labor before instituting such a policy.

Simply because something is legal, however, may not mean it is prudent. If the organization conducts background checks, salary information may be verified through that process. Duplicating that effort may not be necessary. In addition, one many construe such a practice as price fixing and an exploration of a competitor’s pay rates, raising concerns with the Department of Justice. In addition, if the practice is not applied consistently, the door is possibly open to discrimination claims.

Furthermore, asking for such information may send the message that the employer does not trust its candidates. For example, if someone says he / she previously made $40,000 a year, and are asking for $45,000 at your organization, this should not raise a red flag if the position’s pay range is $35,000 - $52,500. If, however, the person claims he / she earned $50,000 two jobs ago, is currently making $105,000, and now wants a salary around $140,000, I would explore that more deeply. Such pay jumps could be related to explainable factors such as earning an advanced degree, or receiving a desired promotion. Or it could be due to salary fibbing.

Good luck with your interviews! We’d love to hear how everything works out.

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