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Compensation - Who Needs to Know?

Q. Is it legal for potential employers to ask what your current salary is and require a specific answer?

A. According to Dave Wilson, of law firm Hirsch Roberts Weinstein, it is not illegal for hiring managers to ask for your compensation; however, you are not legally obligated to answer. There is no legal obligation to make an offer, and no legal obligation to accept an offer. Your former employer can verify your compensation, and if the numbers you provide don’t match, you are at a significant risk. How you handle this situation can determine your success or not.

Many people believe lots of “gamesmanship” in the interview can be successful, and recommend not providing an answer to the question -- “Don’t give a number first or you lose.” Many books have been written about how to negotiate salary, and it seems to me that authors have never actually been in a situation where they have been asked to discuss their historic compensation, or what they are looking for regarding compensation in the new job. This is not how it really works, and you need to be prepared to deal with compensation professionally before you respond to an ad, or have your first networking meeting. When this conversation occurs is important. Too early in the process can eliminate you as too highly paid. This conversation needs to happen after a company knows they want you. Then, you have the best opportunity to get the offer you want.

Hiring organizations want to know what you made on the job, and what it will take to get and keep you. You want to know what they will pay, and if you can get more than you hoped for. The best place for both sides to start is with market research. The company will have information about what the going rate is for someone with the skills and experience they want. They will have a range that allows them to look at junior people for the role, and more highly skilled contributors, with a compensation plan that matches. You need to do the same research so that you have similar data, and know what you are worth in the marketplace. You need to find out if you were paid appropriately, underpaid, or overpaid in your previous organization. This has to be based on fact – based on current market data, not a gut feeling.

When you are asked to respond to salary questions, first identify the question. There are two versions of this question and you need to be aware of which one you are responding to. “What were you making?” and “What do you hope to make?”. When responding to any question about money, pay close attention to the words you are using. Know what your salary is, and know what your compensation is. Your salary is one part of your compensation. Compensation is much broader and can include your benefits package (and how much your employer pays toward medical), bonus, incentives, it would include a 401K match or contribution, your paid time off (vacation, sick time, personal days), life insurance, disability, tuition reimbursement, your mobile phone fees. The list can be quite extensive, and should impact your answer.

For example, your answer is “My current (or most recent) compensation was in the mid $50’s, with a significant benefits package, 3 weeks’ vacation, and a guaranteed 20% bonus. What is the range for this position?”. This needs to be said in one breath. You should know that you are in the ball park for the job; your goal is to get to the top of the range.

If you say, “I’d rather not tell you my compensation, but what is the range for this position?” you will most likely not get the answer you are looking for.

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