#Leadership : Why Asking About Current Pay Is the New Taboo for Prospective #Employers … New Laws around the U.S. are trying to Close #WageGaps in the #Workforce

The move stems from a slew of new laws around the U.S. aimed at closing wage gaps in the workforce. The theory behind them is that using past salaries to benchmark future pay can perpetuate unfairly high or low wages that workers carry from job to job.

New York City and Massachusetts passed rules in 2016 banning employers in those regions from pressing job seekers to disclose salary history. Since then, more than a dozen other cities and states have followed with their own wage-setting and wage-inquiry rules for employers, including California, New Jersey, New Orleans and Pittsburgh.

Proponents of the new laws say withholding information about past wages encourages employers to judge the value of a job, rather than the applicant. The companies say providing candidates with a salary range based on factors like skills and experience can help correct inconsistencies in how different employees, including women and people of color, were valued in another role or setting.

“These new laws have created a great opportunity for employers to do some self-reflection,” said Cheryl Pinarchick, a partner at Fisher & Phillips LLP and co-chair of the law firm’s pay equity practice. Many are thinking about whether they can justify differences in the salaries that their current workers earn, she said.

Every week, Ms. Pinarchick’s firm gets new requests from employers who want help with audits of their pay practices, a volume that’s up 10-fold from two years ago, she said.

At the end of March, Bank of America required recruiters to drop salary-history questions from the application process across the company. Hundreds of hiring managers have been trained in the past year to focus pay negotiations on the salary ranges established by the bank for each job, said spokesman Andy Aldridge.

“We want to be a great place to work, and that includes how we approach things like pay equity,” he said, adding that Bank of America conducts annual reviews of its roughly 208,000 employees to ensure they are paid fairly for performance.

Pay disparities for workers often persist when people are hired at lower salaries early in their career and then that compensation becomes the root of future salary negotiations. The gap can widen due to differences in candidates’ willingness to negotiate and success rates in those talks.

The Philadelphia Chamber of Commerce sued to halt the rollout of Philadelphia’s salary-history ban, which was scheduled to take effect last spring, arguing the ordinance infringed upon businesses’ free-speech rights. The group expressed concern that a blanket restriction could create new problems, such as not knowing how rich a salary it would take to lure a high-level executive from her current employer.

The rule’s implementation has been temporarily suspended until a final decision is made.

Applicants wait in line at a job fair at an Amazon fulfillment center, in Kent, Wash., on Aug. 2, 2017. Some companies like Amazon say they are instructing recruiters not to ask about salary or benefits a candidate received in previous positions. PHOTO: ELAINE THOMPSON/ASSOCIATED PRESS

PayScale , a compensation software company, in 2017 surveyed more than 15,000 job applicants from April to June using its salary-comparison website to examine how the absence of pay-history information affects offers. The results surprised  Lydia Frank, a vice president at PayScale, because they contradict the advice she normally offers job applicants to withhold salary history when discussing pay.

When women were asked about past wages but declined to share the figure, they were offered 1.8% less than women who disclosed their salary history, the PayScale study found. But men who declined to disclose previous compensation received 1.2% higher offers than men who provided the information.

Offering a woman less for refusing to share pay information may reflect an unconscious bias against those who negotiate, Ms. Frank said, adding that the research shows it is important to stop using salary history as a guide for future pay for anyone.

Pay gaps can be exacerbated by differences in how hiring managers and job seekers approach salary negotiations. Men are typically more willing to negotiate salaries—and more richly rewarded for doing so—while some women get penalized for appearing overly aggressive, according to a growing body of economic and management research, including studies published by the Harvard Kennedy School and Georgetown University McDonough School of Business.

The U.S. Court of Appeals for the Ninth Circuit last week determined that businesses may be held liable for discrepancies in their workers’ pay even if the imbalance stems from a previous employer, adding further pressure to correct pay gaps based on gender, race or other nonperformance related factors.

“We’ve seen a lot of clients adopting the spirit of law, understanding bans on salary-history inquiries are about pay equity,” said Mollie Mantia, director of compliance for the talent arm of Automatic Data Processing Inc., a payroll management firm. Instead, she said more employers are opting to look at a fair market value for their talent.

“Employers are looking at questions like what’s the industry standard?” she said.

Write to Kelsey Gee at kelsey.gee@wsj.com