NYC Companies Can No Longer Ask For Your Salary History. Here's Why That's Great.

If you work in New York City, you will no longer have to answer the dreaded interview question, “How much were you making at your last job?”

Public Advocate Letitia James’s bill, designed to help close the gender wage gap, was passed just one day after Equal Pay Day, the day that marks how far into the current year women have to work in order to earn what men made last year. It prohibits public and private employers from requesting salary history information.

Asking about a woman’s salary history matters because women are paid, on average, 20% less, or only 80 cents for every dollar paid to their male counterparts. The gender wage gap for Hispanic, black, and Asian women, compared to white men, is 54%, 45%, and 37%, respectively.

When a woman interviews for a new job and reveals her previous salary, the prospective employer may offer her an increase based on what she was previously making. When a new salary offer is based on a previous — underpaid — salary, it perpetuates the cycle of keeping women’s wages down.

In a fair system, candidates should to be paid for the job they are being hired to do, not based on what they were making before. This bill should help make the hiring process more of a level playing field, particularly for someone who is uncomfortable or inexperienced when it comes to negotiation.

Candidates often unwittingly anchor themselves before ever speaking to a representative at the company — by listing their previous salary or salary requirements on an online application form. That’s why revealing salary history is a bad deal for candidates, and particularly for those who are underpaid compared with the market value for their position.

The first number that comes up in a negotiation is known as the anchor. Anchors are psychologically very powerful and impact the course of the conversation. Imagine a boat that drops an anchor down onto the ocean floor. The anchor creates a drag on the boat in the water, causing the boat to slow down and eventually stop. In a negotiation, anchors work the same way: they pull the discussion in the direction of that first number. Translation: to get a higher salary, you want to anchor yourself to a high number.

In my work as a negotiation coach, I’ve had clients tell me that their recruiter would refuse to advance them to the next round of interviews unless they gave their salary history. Recruiters I know have told me the same — they consider previous salary required information. I’ve experienced it myself as a job seeker.

But to avoid giving away your leverage too soon, your best bet as a candidate is to defer all discussions about salary until the right time in your interview process: when you are confident that you want the position, and that they want to hire you. The new bill makes it easier to do that.

This all assumes that you will be negotiating for your salary and that you have no official information from the company about the pay range for the position. Salary transparency, when everyone at a company knows how much everyone else makes, is hotly debated. The salary history bill stops short of requiring that salaries be listed with job descriptions. But that, too, would be positive for female job seekers, because women are more likely to negotiate when they are given social permission to do so.

This post originally appeared in ForbesWomen, where Alexandra Dickinson was a contributor. She wrote about how to use a negotiation mindset to achieve your goals.