Revised Law Clarifies Ban on Prior Salary History Inquiries and Amends Equal Pay Act (AB 2282)

In 2016, California enacted AB 168, precluding employers from inquiring about prior salary history and requiring employers to provide upon “reasonable request” by an applicant a “pay scale” for a position. The law created numerous questions for employers who sought to comply with the new restrictions.

On July 18, 2018, Governor Jerry Brown approved AB 2282, which clarifies several of the provisions and terms used in AB 168. Specifically, it amends Labor Code section 432.3 to define “pay scale” as a “salary or hourly wage range.” It also defines “reasonable request” as a “request after an applicant has completed an initial interview with the employer,” and further defines “applicant” and “applicant for employment” as “an individual who is seeking employment with the employer and is not currently employed with that employer in any capacity or position.”  After the enactment of AB 168 last year, many employers wondered whether it was still permissible to ask an applicant about his/her salary expectations.  AB 2282 answers this question in the affirmative, specifically stating that the law does not prohibit an employer from asking an applicant about salary expectation.

In 2015, California amended its Equal Pay Act (Labor Code section 1197.5) to state, “prior salary shall not, by itself, justify any disparity in compensation.” The new law strikes this language and makes clear that prior salary history “shall not justify any disparity in compensation.” It further makes clear that while an employer may make a compensation decision based on a current employee’s existing salary, any wage differential resulting from that compensation decision must be justified by one or more of the specified factors in section 1197.5 (e.g., seniority system, merit system, etc.). In other words, while section 1197.5 left open the possibility that prior salary history could be a factor, but not the sole basis for, a wage disparity, the amended law now recognizes an employer’s ability to consider prior salary history when making compensation decisions (e.g., for purposes of giving a raise or bonus), so long as any wage differential from that compensation decision is justified by one or more specified factors in section 1197.5. 

San Francisco's Salary History Ban Ordinance Differs Slightly From AB 2282

Effective July 1, 2018, San Francisco's Consideration of Salary History Ordinance has both provided the basis for the state law AB 2282 discussed above, and contains some differences from state law, which are pertinent to San Francisco employers as well as may be potentially instructive in interpreting or further amending the state law. The key differences are that the ordinance:

(1) prohibits employers from providing the salary history of current or former employees without written authorization or unless publicly available (employers should review and update their reference policy to include this requirement);

(2) requires employers to post a notice from the San Francisco Office of Labor Standards Enforcement about these protections at every work location;

(3) expressly allows background checks (which the state law implicitly does) but also makes clear that if a background check reveals salary history it cannot be considered;

(4) like the state law allows discussion of salary expectations, but more directly specifies that this permits discussion of various benefits (e.g., stock options, etc.) which the employee may forfeit if leaving the current employer;

(5) contains protections against retaliation (including refusal to hire) for refusing to provide salary information; and

(6) has a number of specific statutory penalties.

Do you have questions about the ban on prior salary history or how the new equal pay amendments may affect you?  For further information contact:

Michael S. Kalt (MKalt@wilsonturnerkosmo.com)

Emily J. Fox (EFox@wilsonturnerkosmo.com)

Martina M. Nagle (MNagle@wilsonturnerkosmo.com)

Wilson Turner Kosmo’s Special Employment Alerts are intended to update our valued clients on significant employment law developments as they occur. This should not be considered legal advice.