California Clarifies its Salary History Ban

Earlier this month, Governor Jerry Brown signed A.B. 2282 into law, clarifying several unanswered questions concerning California’s salary history ban.

The law amends Labor Code sections 1197.5 and 432.3, which as we have previously discussed here and here, dictates the use of salary history information in hiring and promotion decisions. As a reminder, Labor Code section 1197.5 prohibits employers from paying employees of one sex less than the other for substantially similar work and prohibits prior salary, by itself, from justifying any pay disparity. Labor Code section 432.3 prohibits California employers from asking job “applicants” for salary history information and requires them to provide applicants with the “pay scale” for a position upon “reasonable request.”

Effective January 1, 2019 Labor Code sections 1197.5 and 432.3 are amended in a few key ways:

1. The law defines “applicant,” “pay scale,” and “reasonable request” – these terms were previously undefined in Labor Code section 432.3.
   1. “Applicant” is defined as an individual who seeks employment with the employer, not a current employee;
   2. “Pay scale” means the salary or hourly wage range, and it does not include bonuses or equity ranges;
   3. “Reasonable request” means a request made after the applicant has completed the initial interview.
2. Employers may inquire about “salary expectations”– employers are still not permitted to ask for an applicant’s salary history information, but may ask for an applicant’s salary expectations. This brings the law into line with other similar salary history legislation (such as New York City’s ban).
3. Employers may consider current employee’s salary in specified instances – the law permits employers to use an existing employee’s current salary as one factor in making future pay decisions if any wage differential resulting from that compensation decision is justified by one or more specified factors, including a seniority system, merit system, a system that measures earnings by quantity or quality of production, or a bona fide factor other than race or ethnicity, such as education, training, or experience, as listed in Labor Code section 1197.5.