On October 12, 2017, Governor Brown signed into law a bill (AB 168) which is designed to narrow the gender pay gap in California. The new law which takes effect on January 1, 2018, prohibits California employers from inquiring about a job applicant’s previous salary and benefits. This law applies to both male and female applicants.
Sponsors of the bill argued that simple questions about past salary and benefits act as a barrier to equal pay between men and women. The new law is aimed to give “women the power to determine for themselves where they start negotiating. Women negotiating a salary shouldn’t have to wrestle an entire history of wage disparity”, stated the bill’s principle author Assemblywoman Susan Talamantes Eggman. It is interesting to note that, in 2016, California women who were full-time wage and salary workers had a median weekly earning of $812 or 88% of the $925 median weekly earnings of their male counterparts (as reported by the U.S. Bureau of Labor Statistics). That is down from 90.2% in 2005.
California is not the first state to prevent employers from asking such questions. Massachusetts, Oregon and Delaware all have similar laws. Furthermore, earlier this year, Mayor Ed Lee signed a similar ordinance for San Francisco (Ordinance No. 170350, amending the San Francisco Police and Administrative Codes). That ordinance, which becomes operative on July 1, 2018, makes it illegal for employers to inquire about a job applicant’s salary history or to provide such information about current or former employees. This ordinance applies to nearly all employers, covering individuals, corporations, groups and other organizations no matter the structure, that are required to be registered to do business in the City. The ordinance generally excludes governmental employers; it does, however, specifically apply to the City of San Francisco, both as an employer and as a contracting party.
Under California’s new statute (Section 432.3 of the California Labor Code) applicants are free to volunteer information on prior pay and benefits. If applicants do volunteer such information, then employers may consider it in the offers they make. Employers may also review and consider salary history information that is publicly available pursuant to federal or state law. The new law also requires employers to provide applicants, upon request, with a salary range for the jobs they seek.
Interestingly, Governor Brown vetoed a similar bill in 2015. At that time, he said that such a law would prevent employers “from obtaining relevant information with little evidence that this would assure more equitable wages.” The Governor did not state a reason for changing his mind two years later. In 2015, however, Governor Brown did sign into law the California Fair Pay Act, which requires employers to pay men and women equal salaries for “substantially similar” work. Furthermore, a subsequent measure made it illegal for an employer to base compensation solely on the worker’s past salary.
In light of the new law, all California employers should take note of these changes and review their employment applications and hiring processes to ensure compliance.