The Salary History Ban
As Payne & Fears LLP previously reported, in October 2017 Governor Jerry Brown signed into law Assembly Bill 168 which amended California's Equal Pay Act to prohibit California employers from: (1) relying on a job applicant's salary history in setting the applicant's starting wage/salary, (2) eliciting salary history from job applicants, and (3) failing to provide a job applicant, upon reasonable request, the pay scale of the position sought by the applicant.
AB 168 took effect on January 1, 2018. But with ambiguities in the text, employers were left wondering just how far their obligations extended. Thankfully, with the passage of Assembly Bill 2282, which will go into effect on January 1, 2019, the California Legislature has addressed some of the law's unclear provisions.
Changes to the Current Law
Assembly Bill 2282 makes three changes to the California Equal Pay Act.
First, the bill defines three ambiguous terms: "pay scale," "reasonable request," and "applicant."
Second, the bill clarifies that employers may ask an applicant about his or her salary expectations. This will only be helpful in weeding out applicants who seek compensation above a position's pay scale, and should not be used as a factor in setting an applicant's starting wage.
Third, AB 2282 provides guidance on how California employers may treat compensation decisions of current employees. The bill limits "prior salary" to a current employee's pre-employment salary. Nothing in the law prohibits an employer from making a future salary decision based on a current employee's existing salary - so long as any resulting disparity in pay is justified by the specific factors enumerated in Labor Code section 1197.5; namely a seniority system, a merit system, a system that measures earnings by quantity or quality of production, or a bona fide factor other than sex. These factors were discussed in more detail in our October 2015 insight.
What Employers Should Know Now
The changes to the "Salary History Ban" provided by AB 2282, while helpful, do not substantially alter or lessen California employers' obligations. The bill does not change the wide-ranging goal of the prior law: providing equal pay to employees who perform substantially similar work. Accordingly, the suggestions we offered in October 2017 should continue to be followed in the future.
Contact Payne & Fears LLP if you have questions about California's Equal Pay Act, Assembly Bill 168, Assembly Bill 2282, or would like further guidance on how these new laws may impact hiring and/or salary decisions in your workplace.