California has joined a growing number of cities and states seeking to advance gender pay equity by passing laws prohibiting employers from asking job applicants about their salary histories.1 Effective January 1, 2018, California employers may no longer ask job applicants for, nor seek information about, their salary histories.
Subject to limited exceptions, the newly enacted California Labor Code Section 432.3 not only bans employers from seeking salary history information, but also prohibits them from relying on the salary history information of an applicant as a factor in determining: 1) whether to offer the applicant employment; or 2) what salary to offer the applicant. In addition, Section 432.3 requires an employer, upon reasonable request, to provide an applicant the pay scale for a position in question. The new law does not, however, prohibit an applicant from voluntarily—and without prompting—disclosing salary history information.
Who Is Covered?
Section 432.3 applies to "all employers, including state and local government employers and the Legislature."
What Does Section 432.3 Prohibit and Require?
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No Seeking Salary History Information. Section 432.3 prohibits an employer from "orally or in writing, personally or through an agent, seek[ing] salary history information, including compensation and benefits, about an applicant for employment." Notably, the statute does not prohibit inquiries about an applicant's salary expectations.
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No Reliance on Salary History in Determining Whether to Offer Employment or Deciding What Salary to Offer. Employers may not rely on the salary history information of an applicant as a factor in determining whether to offer employment or determining what salary to offer.
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An Applicant's Unprompted and Voluntary Disclosures of Salary History Is Permissible. While the law does not prohibit an applicant from disclosing salary history information to a prospective employer, the disclosure must be voluntary and without employer prompting.2 Further, while employers are not prohibited from considering such salary history information in determining a salary, consistent with existing law, "prior salary shall not, by itself, justify any disparity in compensation."
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Pay Scale Information. Section 432.3 requires that employers, upon a reasonable request, provide the pay scale for a position to an applicant for employment. Unfortunately, the statute does not define "pay scale."
What Should Employers Do Now?
To comply with Section 432.3's requirements, employers are well-advised to consider the following actions:
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Review and revise relevant hiring documents to ensure that they do not include salary history inquiries. Such documents may include job application forms, candidate in-take forms, standard interview templates, recruiter training materials, and any other documents that may request an applicant's salary history. Employers should be aware that the failure to address deficiencies in documents such as applications may subject them to penalty claims under California's Private Attorney General Act (PAGA).
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Make sure that, through training or otherwise, managers, decision makers, and other personnel involved in the hiring process are fully informed regarding Section 432.3's requirements and prohibitions.
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Confirm that outside recruiters understand Section 432.3 and that they will comply with its terms.
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Where making inquiries as to salary expectations, do so carefully to avoid any appearance of inquiring indirectly about salary history. Employers also may wish to consider documenting that the inquiry addressed salary expectations only (and not salary history).
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Especially where an employer has customarily taken into account salary history in connection with filling certain roles, consider whether other indicators such as prior experience should be weighed instead. Similarly, in general, employers should seek to avoid making assumptions as to salary history in making hiring decisions.
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Prepare a "pay scale" for the position at issue prior to considering applicants for the position or interviewing candidates, and ensure that the pay scale is readily available to provide to any candidate requesting such information. Employers should similarly consider documenting those factors informing the pay scale for a particular role, as well as assessing whether those employees currently in the role are being paid consistent with that pay scale.
