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Paul Zimmerman

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California’s Salary History Ban Just Got a Bit Easier to Understand

That employers in California are not allowed to ask job applicants about their prior compensation is, by now, old news. The prohibition was signed into law in October 2017, when California joined several other jurisdictions nationwide in a move to close the gender pay gap by banning salary history inquiries.

Indeed, California Labor Code §432 makes it unlawful for employers to rely on an applicant’s salary history information in determining whether to extend an offer of employment or the salary to be paid. There is more. The law also requires an employer, upon an applicant’s “reasonable request,” to provide the “pay scale” applicable to the position applied for.

Unfortunately, the meanings of these terms –  “applicant,” “reasonable request” and “pay scale” – as used in the statute have been less than clear, which is why, with little fanfare, Assembly Bill 2822 has been signed into law. This amendment to Labor Code §432.3 provides definitions that make the law much easier to decipher.

For purposes of the salary history ban, the following definitions now apply:

Pay Scale: An hourly or salary wage range that does not include bonuses, commissions or equity ranges.

Reasonable Request: A request made after an applicant has completed an initial interview. Note that while this definition may not entirely clarify whether an applicant who does not get a call-back interview is entitled to request the pay scale for a given position, it does make clear that an applicant has no right to the pay scale simply because he or she applied for a job.

Applicant: An individual who seeks employment with an employer. Applicants do notinclude current employees. Thus, employers are under no obligation to provide pay scale information to current employees using the salary history law as a mechanism to seek it out, which is welcome news for employers, particularly larger ones, trying to conduct internal pay equity audits and retain some modicum of confidentiality.

In addition, for employers and recruiters that have struggled to gauge whether there is a financial match between a company and a potential employee, AB 2822 amends to Labor Code to specify that an employer is permitted to ask an applicant about his or her salary expectations. That being said – and to be abundantly clear – an applicant may always voluntarily disclose his or her salary information during the hiring process, and there is nothing prohibiting an employer from considering or relying upon volunteered info in determining an applicant’s salary if hired (though Labor Code §1197.5, which requires pay equity amongst the sexes, must always be followed!)

And speaking of Section 1197.5, amendments have been made to that statutory provision, in what appears to be an effort to address significant wage compression issues arising out of pay adjustments made as a result of the Fair Pay Act. The law now states that an employer may use a current employee’s existing salary to justify a compensation decision, but only so long as the decision is justified by one or more of the following factors: seniority, merit, quantity or a bona fide factor (education, training, geography, shift or experience) that is job-related and consistent with business necessity.

No doubt about it, these new amendments are certainly welcome, and hopefully a sign that the California Legislature, going forward, will be paying more attention to providing detail when imposing obligations on employers.

This blog post is not offered as, and should not be relied on as, legal advice. You should consult an attorney for advice in specific situations.