California Pay Equity Laws

California Governor Jerry Brown signed AB 168, a statewide ban on employer inquiries into an applicant’s salary history, adding California to the growing list of states, cities and municipalities that ban salary history inquiries. The bill aims to narrow the gender pay gap by preventing employers from using prior salary information to determine offers and thus perpetuate a cycle of lower salaries for women.

Background

AB 168 is part of a broader effort in California to address structural barriers to gender pay equity. Since 1949, the California Equal Pay Act has required employers to pay employees equal pay for equal work, regardless of gender. In October 2015, Governor Brown signed into law the California Fair Pay Act (SB 358), which strengthened equal pay protection by requiring equal pay not only for equal work but also for “substantially similar” work as it relates to the necessary skill, effort and responsibility for the job. In 2016, Governor Brown amended the Equal Pay Act to add race and ethnicity as protected categories and prohibit employers from relying on prior salary to justify a gender-, race- or ethnicity-based pay disparity. AB 168 further expands equal pay protection in California by imposing additional restrictions regarding an applicant’s salary-history information, which includes both compensation and benefits.

Key Components

In addition to prohibiting salary-history inquiries, AB 168 prohibits employers from relying on salary history in determining whether to offer an applicant employment or what salary to offer. Further, employers cannot seek salary-history information about an applicant unless the information is available to the public pursuant to federal or state law. Moreover, employers must provide to applicants the pay scale for the position sought upon reasonable request.
While the law prohibits employers from inquiring into salary history, an applicant may still offer such information voluntarily and without prompting. If an applicant elects to do so, the employer may not consider that salary history in determining whether to hire the applicant, but it may rely on the information in determining salary.

Guidance for California Employers

In light of AB 168, California employers should carefully analyze existing employment policies, including employment applications and interview scripts, to ensure compliance. Employers should also review their hiring processes and retrain hiring personnel to ensure that recruiters and interviewers are informed of the ban on salary-history inquiries. Employers should also note that, even if the circumstances allow consideration of salary, prior salary cannot, by itself, justify a pay disparity between employees that perform substantially similar work.

Additional reporting provided by Shook Summer Associate Joy Merklen.

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