California outlaws questions about salary history

By Adriana Cara

On October 12, California joined the ranks of states, such as Oregon, Delaware and Massachusetts by passing Assembly Bill (AB) 168, a law that prohibits employers from requiring job applicants to disclose their salary history. Municipal governments, such as San Francisco, Philadelphia and New York City, have passed similar laws with the goal of eradicating pay disparity among genders and, in the case of California, on the basis of race and ethnicity, as well.

History of the California Fair Pay Act

Unbeknownst to many, California's Fair Pay Act was first enacted in 1949, and mandated equal pay for equal work. In 2016, the law again made headlines when it was amended to require equal pay for "substantially similar" work, a less difficult standard for applicants and employees to meet. The problem with the "equal work" standard employed by the original version of the Act was that it provided an easier way for employers to circumvent the spirit of the Act by arguing that pay disparity among different genders was allowed provided that the work in question was not identical.

The 2016 amendments eliminated this obstacle by replacing a comparison of "equal work" with "substantially similar" work. As such, an applicant or employee is no longer faced with the daunting obstacle of proving he or she would or is performing identical work as a person of another gender; rather, he or she must show the "work is mostly similar in skill, effort, responsibility, and performed under similar working conditions."

In 2017, the Act was again amended to prohibit pay disparity on the basis of race and ethnicity.

2018 amendments to the Act

AB 168, which goes into effect on January 1, 2018, again expands the Act's protections by prohibiting employers from requiring applicants to disclose their salary history during the application process. The rationale behind the law is that considering such information when a person's salary history may have been the result of unfair pay practices simply perpetuates the unfair results of the prior gender-, race- and ethnic-based discrimination. Under the most recent version of the law, employers were permitted to request this information, but it could not be the sole factor relied on when setting salary for a new hire. AB 168 abolishes this practice altogether, and with limited exceptions, prohibits the involuntary disclosure of such data. The new law applies to all employers, both public and private, and regardless of size, and, in sum:

• Prohibits an employer from requiring an applicant to disclose salary and benefits history;
• Prohibits an employer from relying on salary and benefits history of an applicant when deciding the amount of compensation and types of benefits to offer him or her; and
• Requires employers to provide a pay scale for the position sought to applicants, upon their reasonable request.

The above notwithstanding, the Act does not prohibit employers from considering an applicant's salary history when it is legally available to the public (for example, under the California Public Records Act or the federal Freedom of Information Act) or when an applicant voluntarily provides this information to an employer. However, AB 168 clarifies that its provisions "shall [not] be construed to allow prior salary history, by itself, to justify any disparity in compensation."

Take-away for employers

California employers should take time before the New Year to consult with experienced employment counsel to ensure their policies and practices comply with the latest amendments to the Act. Employment applications, interview questions, and written policies should be revised, as necessary, to ensure that salary history is not considered in a way that would violate the Act. Further, employers are well-advised to train personnel involved in the recruitment of applicants to ensure they are not requesting such information during the interview process, job postings or by any other method.

Adriana Cara is a partner in the Employment, Labor and Benefits Department at Dinsmore & Shohl, a San Diego law firm.