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December 16, 2017

Employment Law Practice Alert: California's New Salary History Ban

California has joined a handful of jurisdictions in banning employers from prompting applicants for salary history. The law, Assembly Bill 168 (“AB 168”), takes effect January 1, 2018, and employers must ensure that their policies, procedures and practices comply with the new ban. AB 168 applies to both private and public employers.

AB 168 is the next step in the evolution of California’s equal pay landscape. California has had its own Equal Pay Act since 1949, which was recently amended in 2015 by the California Fair Pay Act. That existing statutory scheme already prohibits employers from relying solely on salary history to justify pay discrimination. However, the wage gap has persisted. According to the U.S. Department of Labor Bureau of Labor Statistics, in 2016 women in California earned approximately 88 percent of the median salary of male counterparts.

AB 168 prohibits employers from inquiring about or utilizing salary history in making a decision as to whether to hire an applicant or how much salary to offer the applicant. However, if an applicant volunteers his or her salary history, such as by including prior salaries on a resume, an employer can consider that information only in connection with making a salary determination for the applicant, but not in the decision as to whether or not to hire the applicant.

One unique aspect to AB 168 is that it requires an employer to provide a pay scale for the position at the applicant’s reasonable request. The law does not explain or define what may be considered a reasonable request, although it is difficult to imagine a scenario in which it is unreasonable for a job candidate to ask about compensation. Failure to comply with AB 168 could subject an employer to civil liability.

Therefore, compliance with AB 168 should be a multi-step approach. First, employers should review any written policies and procedures governing hiring practices, beginning with employment applications. Employment applications should not include any questions regarding prior salaries. Even including a space for salary information could be viewed as “prompting” the applicant for a salary history in violation of the new ban. The safest approach will be to delete any reference of prior salary on an employment application altogether.

Second, employers should consider their hiring practices. Human Resource managers or other persons conducting interviews or engaging in the hiring process should be informed of the change to the law. Asking a candidate about salary history during the interview process is a violation of the ban and could expose an employer to liability. Employers should consider taking the extra precaution of training interviewers to disregard any salary information volunteered by an applicant during an interview.

Finally, employers should be prepared to disclose a pay scale to an applicant upon reasonable request. Employers should use the time before the law takes effect to assess or create pay scales, ideally for all positions, but most urgently for any open positions or soon to be open positions.

Please contact Julia Jenness, Kimberly Lucia or another member of our Employment Law Group if you have any questions or concerns about AB 168.

Legal disclaimer: The information in this article (i) is provided for general informational purposes only, (ii) is not provided in the course of and does not create or constitute an attorney-client relationship, (iii) is not intended as a solicitation, (iv) is not intended to convey or constitute legal advice, and (v) is not a substitute for obtaining legal advice from a qualified attorney. You should not act upon any of the information in this article without first seeking qualified professional counsel on your specific matter.