California Passes New Law Banning Salary History Inquiries
California has just joined several other states such as Oregon, Massachusetts, Delaware in restricting employers from inquiring about employees’ salary and benefits compensation history. The Assembly Bill which was sponsored by Assemblywoman Susan Eggmon (D-Stockton), enjoyed bi-partisan support, and was signed into law by Governor Jerry Brown on October 12, 2017, took effect on January 1, 2018 and will amend section 432.2 of the California Labor Code.
California Labor Code § 432.2 now prohibits employers from asking or seeking, orally or in writing, by themselves or through an agent, the potential employee’s prior salary or prior benefit compensation plans, or from considering that history as a factor in determining whether to offer employment or what salary to offer the potential employee. This does not prohibit applicants from voluntarily offering the information provided that it is given without prompting by the employer. In that case, the employer may consider the information in determining an employment offer. The law does not apply to existing employees who may have their current compensation limited by their previous level of compensation and benefits. It also does not prohibit an employer from acquiring salary information that otherwise might be available under federal or state law.
Conversely, applicants have the right upon “reasonable request” to inquire about the salary range or pay scale for a given position. “Reasonable request” is loosely defined. Employers should have a pay scale in mind before interviewing potential employees. Such a scale could be constructed from a range of salaries, carefully anonymized, which have been offered to other employees in a similarly situated positions doing the same type of work.
While many job applicants will likely benefit from this new law, the intent of the law is revealed in the Legislative commentary: “Gender wage discrimination is destructive not only to female workers but for our entire economy. Closing the wage gap starts with barring employers from asking questions about salary history so that previous salary discrimination is not perpetuated.” This law continues the expansion of California’s Equal Pay laws which have been in effect since 1949 requiring equal pay for substantially similar work. Clearly the law was set in place to discontinue the cycle of gender inequality based on prior salary history, which may have been based on a biased decision making process from previous employers, and attempts to assign a value to the work to be performed rather than the previous salary history of the worker performing the job.
In light of the new law, every California employer needs to examine their pre-hiring procedures, including immediately implementing managerial and recruiter training, and revising application forms and procedures. Vogt, Resnick & Sherak, LLP remains committed to keeping you apprised of important business developments. Please give us a call if we can be of any assistance with your business needs.