With the signing into law of bill AB 2282 by Governor Jerry Brown, California continues to take an aggressive stance towards achieving the goal of equal pay for all workers, regardless of gender, race, or ethnicity.
The new law amends the existing state salary history ban which came into effect January 1, 2018 (AB 168). The amended salary history ban is scheduled to take effect January 1, 2019. The law clarifies employers’ obligations under the salary history ban in three important ways:
1. The bill specifies that the salary history ban does not prohibit employers from inquiring into the applicant’s salary expectation for the position being applied for.
2. Current law requires an employer, upon reasonable request, to provide the “pay scale” for a position to an “applicant” applying for employment. Under AB 2282, “pay scale” would be defined as a salary or hourly wage range; “applicant” would mean anyone applying for employment that does not currently work for the employer in any capacity.
3. Perhaps most importantly, AB 2282 provides exceptions to the ban on justifying disparities in compensation based on prior salary. AB 2282 authorizes compensation decisions for current employees based on current salary so long as any pay disparities resulting from the decision can be justified by specific factors enumerated in the statute, such as a seniority system, merit system, or knowledge, training or experience.
More questions remain, such as can employers use salary history in their organization to make compensation decisions? Ostensibly yes, because an “applicant” under AB 2282 does not work for the company in any capacity. Employers should consult with counsel on this issue and the application of AB 2282.
California is the not the only state to have passed tough legislation banning employers from inquiring into applicant’s previous salary earnings during the application process. In 2018 alone, Massachusetts, Michigan, New Jersey, Pennsylvania and Vermont have put into effect laws banning an employer’s inquiry into job applicants’ prior salary history in the hiring process.
If your organization has operations in California, or any of the states or cities passing legislation to further the equal pay initiative, it may be time to conduct a pay audit. Employers should try to get ahead of this trend by reviewing job hiring processes and paperwork to see if their companies’ practices are consistent with new trends in pay equity law, including such practices as refraining from asking applicants about their previous salary.