Effective January 1, 2018, California employers can no longer ask job applicants about their prior salary. The law also requires an employer “upon reasonable request,” to provide the applicant with a pay scale for the position.
Signed into law by Gov. Jerry Brown on October 12, 2017, AB 168 applies to employers of any size.
The new law’s purpose is to narrow the gender wage gap. Backers of the law believe that setting pay rates based on prior salaries, which may have been discriminatory, perpetuates inequities in pay.
A precursor to the new law (AB 1676) was passed in 2017. It stated that “prior salary cannot, by itself, justify a wage differential under Section 1197.5 of the Labor Code.” AB 168 goes further and disallows employers, or their agents, from asking applicants for salary history, orally or in writing. “Salary history information” includes compensation and benefits.
If an applicant “voluntarily and without prompting” discloses salary information, the employer can consider and rely on the information in setting the applicant’s salary. Additionally, any salary history information that is publicly available (pursuant to federal or state law), can be considered by the employer.
Additions – San Francisco
San Francisco has its own Parity in Pay Ordinance which takes effect July 1, 2018. In addition to preventing employers from asking job applicants about salary history, it prevents employers in San Francisco from refusing to hire, disfavoring or retaliating against an applicant for not disclosing pay history, releasing any salary information without the employee’s consent, and imposes an obligation to post information about the Ordinance in the workplace. The Ordinance does, however, allow an employer to ask about the applicant’s expectations with respect to salary.
San Francisco’s Ordinance will be enforced by the Office of Labor Standards Enforcement (OLSE) which can investigate possible violations, and may issue a warning and notice to correct or a penalty of up to $500. Penalties begin on January 1, 2019.
What should employers do, now?
- California employers need to educate all those involved in the hiring process, including their outside recruiters, as to what salary questions can – and cannot – be asked of applicants.
- Employers need to educate all those involved in the hiring process regarding how to respond to applicants’ requests for “pay scale” information.
- Employers should review their application forms to ensure salary information is not requested.
- Employers who do business in numerous jurisdictions need to understand that California is not the only jurisdiction which prohibits salary history inquiries. Oregon, Massachusetts, Delaware, New York, Puerto Rico and Philadelphia have passed similar laws; New York City’s prohibition on requesting salary history is effective October 31, 2017.
Reminder – Restrictions on the use of criminal background history
Don’t forget about restrictions on the use of criminal history information when making employment decisions in California. San Francisco and Los Angeles have specific ordinances that apply to employers in those cities as well. The U.S. Equal Employment Opportunity Commision (EEOC) has also created guidelines on the consideration of criminal histories in employment decisions.
Because preparation and education will help minimize potential claims of non-compliance, we urge you to put new procedures in place as soon as possible.
Please call on us if we can assist you or answer questions about these new employer obligations in California.
This Update is provided to our clients, business associates and friends for informational purposes only. Legal advice should be based on your specific situation and provided by a qualified attorney.