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California employers would be prohibited from asking job candidates for their salary history and would be required to disclose the pay scale for a position to candidates who request it, under a proposal making its way through the state legislature.
The pay scale requirement does not apply to public employers, but salary information for public employees already falls under the disclosure requirements of the California Public Records Act.
AB 168, introduced in January by Assemblywoman Susan Talamantes Eggman, D-Stockton, passed the Assembly May 22 and currently sits in the state Senate.
The bill "is part of an effort in California to address historic and structural impediments to gender equity," said Gina Roccanova, chair of law firm Meyers Nave's Labor and Employment Practice Group, based in Oakland. "That effort includes amendments to California's Equal Pay Act that went into effect in January 2016, which made it more difficult for employers to defend against claims of unequal pay based on gender. In January of this year, a further change went into effect that prohibits employers from using pay history as the sole justification for disparities in pay."
[SHRM members-only toolkit: Building a Market-Based Pay Structure]
According to 2015 data from the Bureau of Labor Statistics, the median weekly earnings for women working full time in California ($775) is 84.8 percent of the median earnings for men ($914), amounting to about a $7,000 gap for women annually. Barring employers from asking questions about salary history so that previous salary discrimination is not perpetuated is key to closing the state's gender wage gap, Eggman said.
Gov. Jerry Brown vetoed a similar bill in 2015 because he said he wanted to give the then-newly enacted equal pay law time to work. Similar prohibitions on salary history inquiries have already passed in Massachusetts, Philadelphia and the District of Columbia and are pending in other states and municipalities.
"Given the heightened risk of Equal Pay Act claims under state law and the prohibition against using pay history as a bona fide justification for pay disparities, California employers are already better off not seeking such information from applicants," Roccanova said. "AB 168, if it passes, may simply turn what is advisable into a requirement."
Prohibition Could Lead to Costly Litigation
The California Chamber of Commerce (CalChamber) and a coalition of employers pointed out that the bill could impede recruiting efforts, could expose employers to costly litigation and that there are many legitimate, nondiscriminatory uses for salary data when making hiring decisions.
"For example, employers do not necessarily have accurate wage information on the current market rates for all potential job positions," said Jennifer Barrera, senior policy advocate for the CalChamber based in Sacramento. "In fact, employers in competitive industries often do not advertise salaries, and such employers utilize their pay structure as a way to lure talented employees from their competition. By requesting salary information, employers can adjust any unrealistic expectations or salary ranges to match the current market rate for the advertised job position."
Recruiters commonly use salary history as a reference for whether the employee's expectations of compensation far exceed what the employer can realistically offer, Barrera said.
"It's unnecessary to require both the applicant and employer to waste time on the interview process which, for highly compensated employees, could be lengthy, to ultimately learn at the end of the process that the employee would never consider taking the compensation offered."
The requirement to provide a pay range to applicants upon request also raises concerns.
"An employer may assume a pay scale accurately captures the current market for a specific position, yet the employer could be wrong," Barrera said. "Disclosing a pay scale could artificially limit an applicant's interest in a position. Employers determine the appropriate wage and salary to pay an applicant based upon various factors, including skill, education and prior experience, as well as the funding available for the job. Employers may feel compelled to enlarge the pay scale to create sufficient room to adjust that rate depending on the various factors and varied candidates for the job."
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