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New Laws Put Onus of Comp Negotiations on Workers

SuperUser Account posted on April 24, 2017

By Jill Gregorie April 24, 2017 

New laws cropping up across the country are putting pressure on job candidates to get aggressive in negotiating pay, or risk losing out long-term.

New York City is set to follow in Philadelphia's and Massachusetts’s footsteps in passing legislation that forbids private employers from asking candidates for salary or wage history during the hiring process, pending Mayor Bill de Blasio’s signature on a City Council measure passed in early April.

Similar proposals have also popped up in states such as Connecticut, Colorado, Delaware and Texas.

And while the laws aim to prevent pay discrimination, it could actually put some workers at a disadvantage, says Alan Johnson, managing director of Johnson Associates.

“The fallacy of the law is that you would assume private firms have an exact knowledge of what the market is and what pay should be, but that’s not true at all,” Johnson says.

In fact, such laws may cause many financial firms that operate under them to begin to “low-ball” candidates, he says. “Pay is one indicator of where you are in your career,” Johnson says. This makes negotiations “even more important than they were in the past.”

But asking for more money is not always easy, says Mark Borges, principal of the San Francisco–based management consultancy Compensia.

“You have to overcome that natural disinclination to promote or assert your own position,” he says.

One strategy is to walk into the meeting armed with research with salary data from the Internet, says Rick Rummage, president and career consultant at The Rummage Group.
When interviewing at a new company, speaking with an employee who already works there can also help, he adds. People are often willing to answer e-mail or LinkedIn requests from individuals asking if they’d be willing to sit down and share thoughts on the job, Rummage says.

Such conversations can be an opportunity to inquire about the expected salary range for a position at the company, he adds.

Before entering dialogue about a potential job offer, Johnson recommends coming up with a realistic income goal to keep in mind during the negotiation. As a general rule of thumb, 15% more than what a person currently earns is reasonable, he says. Professionals who feel particularly confident about their market value, or know that the company they are targeting typically offers generous compensation packages, should consider asking for 20% to 30% more, Rummage says.

Rick Rummage

Fund workers should also build bonuses into their requests, Rummage adds. Such added pay can be within 5% and 25% of the yearly salary.

Once the negotiations start, it’s imperative that candidates let the hiring manager throw out a number first, Johnson says. This can help prevent job seekers from “low-balling themselves.”

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Members of underrepresented groups such as women, people of color, LGBT individuals and the disabled should especially refrain from disclosing their current pay rate, says Katie Donovan, founder of Equal Pay Negotiations. In fact, questions about salary history are “discriminatory if you’re not a middle-aged white man,” she says.

“We should all be making what the white guy makes, but we don’t,” says Donovan, who coaches candidates on salary negotiations.

Katie Donovan

If pressed, Donovan suggests that candidates steer the conversation to their education, experience and accomplishments, and suggest that past pay is irrelevant.

Job seekers can also point out that many states are trying to end the practice of employers asking about pay history and voice support for the progressive message those laws send, Donovan adds.

Candidates in jurisdictions where such questions are allowed can state that their employment agreement prohibits them from discussing their compensation structure, Rummage says.

One time a candidate should bring up current pay is when a prospective employer presents an offer that is lower than what he or she already earns, says Johnson.

“If they offer you $90,000, you can say, ‘I’m making $100,000 and that’s why I asked for what I did,” he says.

If after some back-and-forth, the compensation package is still lower than expected, candidates can be candid and say, “I would love to come on board, but I’m a little disappointed in the pay,” Johnson says. This often pushes the hiring team to bump up their offer, he says.

If the cultural climate of the company outweighs the importance of the pay difference, candidates can ask to have their pay reconsidered earlier than they might otherwise under the company’s traditional pay review schedule, Johnson says. The company and the prospective employee can then sign an agreement stipulating that exemplary performance at that appraisal will be rewarded with a raise.

Once at a company, there are several tactics that workers can use when reviewing compensation with superiors.

Often, those who have been at job for some time see their responsibilities “creep up,” and eventually, they may find themselves fulfilling the duties of a more senior role deserving of higher salary.

In such cases, an employee can show their manager a list of their daily tasks, and ask whether those tasks align with a more senior position. If the supervisor agrees that they do, the worker should then ask for a corresponding raise and job title.

If a more money is not an option, individuals should try to negotiate for other benefits, such as opportunities for learning and development, Compensia’s Borges says. A new role that allows a worker to broaden their skills and knowledge base can “help you down the road when you’re looking for another position, whether internally or externally,” he says.