As California Continues to Expand Fair Pay Protection, How Should Employers Prepare?

California continues to move forward with expanding fair pay protection. Governor Brown over the past several days approved two bills that would ban salary history on job applications across the state and amends the California Fair Pay Act to clarify that its provisions apply to both public and private employers.

• AB 168 prohibits all employers from seeking salary history information about an applicant for employment. It also requires an employer to provide the pay scale for a position to an applicant upon reasonable request. “The practice of seeking or requiring the salary history of job applicants helps perpetuate wage inequality that has spanned generations of women in the workforce. AB 168 is a needed step to ensure that my 9-year-old daughter, and all women, can be confident that their pay will be based on their abilities and not their gender,” said Assemblymember Susan Eggman (D-Stockton), who sponsored the bill.
• AB 46 amended the the California Fair Pay Act to clarify that it includes both public and private employers.

Over the last few years, California state lawmakers have become more hands-on in developing additional laws to close the wage gap between men and women. In October of 2015, the California Fair Pay Act expanded the federal Equal Pay Act in the state by adding stronger requirements to ensure that employees conducting similar work were paid equally regardless of gender. By 2016, the Act was amended to include race and ethnicity as protected categories. In 2017, anti-discrimination became a primary focus, along with bans on salary history requests in cities like San Francisco. The equal pay initiative was given a boost this past summer, as data mining proved to be a hidden gem in revealing disparities in fair pay.

Interestingly, Gov. Brown did not sign a bill that would have required employers with 500 or more employees in California to provide to the Secretary of State specific information regarding gender wage differentials for exempt employees and board members, and have that information posted online. In a statement, Gov. Brown said he was concerned that the bill’s wording would “encourage more lawsuits than pay equity.”

The reality is that Fair Pay protections will only continue to heighten both in California and nationwide. Waiting until they’re written into law to comply will only make for cumbersome changes and potential violations should your company be unable to adapt quickly enough.

The best protection is preparation.

Have employee data readily accessible, including the compensation of every employee that can be compared by the protected class as well as job related factors that can justify pay differentials such as length of time in position and with company. Make sure that every salary offer, raise, and promotion are tracked and that there is supporting documentation.

If your company is not equipped to handle this level of data mining, hire an outside company to conduct a compliance audit and continue to manage data operations.

If your company has potentially engaged in salary discrimination, correct it now with new hires.

Today it is California, but tomorrow it could be where your business operates in the United States. The time to prepare is now.

To learn more about achieving pay equity, click here.