Salary history refers to a candidate's earnings record from prior employment — the salaries, bonuses and other compensation they have received at previous firms. It has historically been a standard input into offer design: employers would ask candidates what they currently earn or have previously earned, and use that figure as the anchor from which to construct a new offer.

This practice is now prohibited in a growing number of jurisdictions, and is under regulatory pressure in many more, on the grounds that it perpetuates existing pay inequity. If a candidate has been underpaid relative to the market at their previous employer — whether because of gender discrimination, negotiating disadvantage, or simply having worked at a firm that paid below market — using their salary history to set a new offer carries that inequity forward into the new employment relationship. Over time and across many hiring decisions, the cumulative effect is to embed and reinforce pay gaps that independent market benchmarking would not produce.

Why Salary History Perpetuates Pay Inequity

The mechanism is straightforward. Consider two candidates with identical skills, experience and market value applying for the same role. If Candidate A was previously paid at P60 of the market and Candidate B was paid at P40, and both are offered a 10% uplift on their prior salary, Candidate A receives an offer at P66 and Candidate B receives an offer at P44. The pay gap between them reflects not their relative value — which is identical — but their prior employment history. If Candidate B is more likely to be female, from an ethnic minority, or from a lower-paying sector or firm type, the salary history anchor embeds demographic pay gaps into the hiring process.

This is why regulators have targeted salary history enquiries as a specific driver of the gender pay gap and broader pay equity failures. The alternative is to anchor offers in market data rather than individual history: what does the market pay for this role, at this level, in this line of business and geography? This is the question that benchmarking answers — and it is the correct basis for offer design regardless of the regulatory environment.

Regulatory Prohibitions

Salary history enquiries are prohibited in a growing number of jurisdictions:

• EU Pay Transparency Directive — Prohibits employers from asking candidates about their salary history and from setting pay based on prior earnings. Employers must instead provide candidates with pay range information for the role being applied for. See Pay Transparency.
• US — Over 20 states and many cities have enacted salary history bans, including California, New York, Illinois and Massachusetts. Federal legislation has been proposed but not enacted.
• UK — Not yet prohibited by statute, but salary history enquiries are widely discouraged by professional guidance and increasingly avoided by employers concerned about pay equity liability.

Salary History and Offer Management

Firms that have moved away from salary history enquiries anchor their offer design in market benchmarking data instead — determining an appropriate offer range based on the role's career level, line of business and geography, and making an offer within that range based on the candidate's experience and the competitive context of the hire. This approach produces more equitable outcomes and is more defensible under regulatory scrutiny. See Offer Management, Lateral Hire and Equal Pay.