During the interview process for a tech job, I was asked to fill out an application, which included questions about my compensation history. When I asked why this info was needed, I was told that it was part of the background check process, and would not be used to determine the size of the offer. Even if that's true, does anyone know any legit reasons why my comp history should be part of a background check? What is the risk for the employer of not knowing that info? Is this standard procedure and/or part of a trend at tech companies? Is it anything more than an attempt to gain negotiating leverage?
I can't remember the last time I gave a compensation history. A year ago I underwent a very extensive background check and my compensation history wasn't requested there either.
That isn't to say that I haven't been asked for "how much [I] made" at the last place I worked and a couple times the place before that, but that was always over the phone and was only to a recruiter when we were discussing positions in general, certainly not as part of an interview.
When I look for work I tell them how much I'd like to make and the least I'll accept, though I only tell the minimum to recruiters and that's rare and very circumstantial. I'd never tell someone that if I were direct hire without a middle-man. (the point is that the middle-man is motivated to get me as much as possible because they usually get commission). I'm honest about the minimum and don't waiver. If they have to reduce their cut, that's their problem. But it's an honest minimum I'd be happy with. I've never had to accept the minimum.
I can't think of a situation where I'd give an actual history to an employer. My history has absolutely nothing to do with what I need to do a particular job. Giving them history only allows them to attempt to justify paying less if possible.
So in my experience, compensation history isn't something I've been asked to give even in background checks (which I've had plenty) and find it slimy that they'd want it before they make an offer. I shouldn't make less now because I once chose to work for less because of the attractiveness of the company or my personal situation.
Don't let an application make you think it's something official. You don't have to put in anything you don't want to. If they don't like it, they don't have to hire you. If they make an offer, then they can ask for other things they genuinely need. It's easy to think you have to fill it out because it's a form. I've actually dropped out of consideration because of the lengthy application they required me to fill out before considering me. The app would have taken over an hour to complete and I'm not going to spend that kind of time before I even know if there's a job or company I want to work at.
Lastly, I've never been asked for background check information before an offer. I either get a form after or get asked more specific questions and details based on my resume.
Did you ask them why they asked for your compensation history ? If not, then I suggest you ask them why it is needed. Please do this with email so that you have records if necessary.
Check if your state/country/city has laws against such practices. If the company is government sector or such, then check if they are legally required to collect your comp history. If you find absolutely no justification for them to ask for comp history, then say that you are not comfortable with sharing it (with your justification for not doing so) and see how they react. Don't refuse outright.
My final suggestion to you would be that you look for other jobs. However, if you need this job badly, then go ahead and give them the comp history and see what they offer. It might not be bad. Meanwhile, keep applying to new jobs. AFAIK, asking comp history during job app is a big red flag. Good luck.
It's not unusual. I think most jobs I've applied for have asked this.
Yes, the company wants the information for negotiating purposes. If you're making, whatever, say $40,000 at your current job, they know that you're unlikely to accept an offer for $30,000, but there's probably no reason for them to offer you $60,000. They know that you'll likely be satisfied with pay in the low 40's. (You may not take the job for other reasons, but you probably wouldn't turn it down because of the money if they offered $42k or so.)
It also helps the company to eliminate candidates that they just can't afford. If you're presently making $100k and they can't possibly afford to pay more than $30k, there's no point wasting your time and theirs by going through an interview. You're very unlikely to take that big a pay cut.
I've often heard advice not to give such numbers, but I really don't see why not. If they're not willing and able to give me at least a modest raise over what I'm making now, why waste both our time any further? It's possible that they're prepared to pay $100k and when you ask for $40k, they say, Oh, ok, yeah, we can do that. But on the other hand, if you refuse to give a number, they might look at your resume and say, Somebody with these skills and experience will surely demand $60k and we can only afford $50k, let's skip him and look at resumes for people we can afford. But if in fact you're willing to work for $50k, you could have gotten the job.
You can debate these kind of things endlessly.
I do recall one time when I was involved in hiring and we had a question on the form for "expected salary" -- we didn't ask past salary but what he was asking for from us. We had a candidate that we liked who put down a number much lower than what the company was prepared to pay. My boss gave him a new application form and quietly told him what number to write, and corporate approved the higher number without blinking an eye.
Personally, I'd view any prospective employer who tries to use my compensation history to get leverage negotiating comp with me - I'd view that attempt as pathetic. Because this prospective employer is competing against other prospective employers and offering a low number is pretty suicidal. In addition, even if I were to take the offer because I need the money, I am going to stick around just long enough to land an offer I can live with from someone else. My prospective employers are better off making me a competitive offer(*) and let the chips fall where they may.
I suppose that a prospective employer would want to know the compensation as part of their background check - I expect that if I claimed that I got paid $80K and my pay stubs show an annualized of $40K, I have an integrity issue that I have to deal with. Plus, I might have to explain why I took a position with such a low salary. If I claim to be team lead and I get the pay of a junior, it's a red flag. And yes, my current employer (40000 employees, $50 billions in sales) did ask me for my compensation history.
(*) - the offer doesn't have to be the top offer because compensation is not by any stretch of the imagination my only criterion.