Organizations are starting to ask candidates for their W-2’s as part of the hiring process. Career Sherpa has a really interesting post about it over on her blog. You can check it out here.
When I first read the article, I thought “Well, I can see asking for or providing a W-2 if it’s necessary to prove employment.” For example, some industries have very rigorous background screening processes for an employee to get a badge, etc. The W-2 served as proof of employment. That was the case when I worked for an airline. But then I remembered that we didn’t start asking for the information until the candidate already had an offer in hand.
Then it appeared obvious that the reason companies are asking for W-2’s is money (i.e., proof of income). My first reaction is, what an employee made in the past shouldn’t matter. It’s about their knowledge, skills and abilities in relation to the job they are being offered.
But I’m not a compensation expert. So I asked Ann Bares, managing partner with Altura Consulting Group and contributor to the Compensation Force and Compensation Café blogs, if she would share her expertise. Lucky for us, she said yes.
Ann, is the notion of supplying your W-2 as income verification a new development?
[Ann] I’m guessing that the question is coming up because of the attention now being directed at salary negotiations, and the fact that the entire negotiation process (including the request for, verification and consideration of current income) is coming under fire for its adverse impact on women and minorities. With this angle in mind, requests that a job candidate supply their W-2 as income verification can be seen as a way to perpetuate past discrimination/disadvantages in salary negotiation rather than simply offering a salary that is commensurate with experience and qualifications.
(Editor’s Note: Check out Ann’s Compensation Café article on this topic here. It’s a great read.)
What factors go into the decision of how much to pay an employee?
[Ann] In most companies (where work is organized into ‘jobs’ and compensated that way), there are two levels of consideration that go into salary determination.
- The job that is being performed. The job itself (independent of the person who holds or will hold that job) is evaluated and assigned a range of salary opportunity based on the value of the key accountabilities/contribution and the skills and knowledge required.
- Once the salary range for the job has been determined, then there is a second decision to be made – the salary level (within that range) that is appropriate for the individual(s) who accepts and performs that job.
Does income verification have a role in the two-level decision making process you’ve described?
[Ann] Based on my experience and understanding, the question of income verification does not come up (typically at least) in determination #1 above, but does in determination #2, particularly in the recruitment and assessment of a potential job candidate. Here’s where someone in the recruiting space would have more insight than a compensation specialist, but I believe that current income level is often one piece of information that is requested and taken into consideration as part of the salary negotiation process.
A HUGE thanks to Ann for sharing her expertise with us. I do hope you’ll check out her blogs – lots of great information. Compensation is a complex topic and the more we can learn about it, the better off we will be – because we need to understand money. Not just how much we get paid but how the company arrives that that number.
Now that we’re much more educated about the topic, it still raises the question, “What should you do if someone asks for your W-2?” I totally agree with Career Sherpa’s assessment. If you provide it, you could be limiting your income potential. If you don’t, you could be eliminating yourself from consideration.
Ultimately, you have to decide how you feel about working for a company that asks you to provide your W-2. That is what will guide your decision.
Image courtesy of Sharlyn Lauby