Existing law imposes various restrictions on employers with respect to applicants for employment. A violation of those restrictions is a misdemeanor.

This bill would prohibit an employer from seeking salary history information about an applicant for employment, except as otherwise provided. The bill would specify that a violation of its provisions would not be subject to the misdemeanor provision.

Existing law imposes various restrictions on employers with respect to applicants for employment. A violation of those restrictions is a misdemeanor.

This bill would prohibit an employer from seeking salary history information from about an applicant for employment and from releasing the salary history of any current or former employee without written authorization from the current or former employee or without first obtaining certification from the prospective employer that the prospective employer has obtained written authorization from the current or former employee to disclose that information. employment, except as otherwise provided. The bill would specify that a violation of its provisions would not be subject to the misdemeanor provision.

Existing law imposes various restrictions on employers with respect to applicants for employment. A violation of those restrictions is a misdemeanor.

This bill would prohibit an employer from seeking salary history information from an applicant for employment and from releasing the salary history of any current or former employee without written authorization from the current or former employee. By imposing new prohibitions on employers, the violation of which would be a crime, this bill would impose a state-mandated local program. employee or without first obtaining certification from the prospective employer that the prospective employer has obtained written authorization from the current or former employee to disclose that information. The bill would specify that a violation of its provisions would not be subject to the misdemeanor provision.

Existing law imposes various restrictions on employers with respect to applicants for employment. A violation of those restrictions is a misdemeanor.

This bill would prohibit an employer from publishing, listing, or posting an advertisement, as specified, to recruit candidates without including the minimum rate of pay, and from paying wages for less than what were advertised. The bill would also prohibit an employer from seeking salary history information from an applicant for employment and from releasing the salary history of any current or former employee without written authorization from the current or former employee. By imposing new prohibitions on employers, the violation of which would be a crime, this bill would impose a state-mandated local program.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

Existing law generally prohibits an employer from paying an employee at wage rates less than the rates paid to employees of the opposite sex in the same establishment. Existing law further imposes penalties on an employer who violates this provision, subjecting the employer to civil action and specifying liquidated damages that may be paid to an employee who is paid unfairly.

This bill would state the intent of the Legislature that would require pay equity for women in the workplace.

GOVERNOR'S VETO

GV Bill Id:AB 1017

Author:(Campos)

As Enrolled Ver:September 8, 2015

2/3 vote

Original Committee Reference: L. & E.

SUMMARY: Prohibits the use of employee salary history information, as specified, and enacts other requirements.

The Senate amendments:

1. Revise the bill to merely prohibit an employer from orally or in writing, personally or through an agent, from seeking salary history information, including, but not limited to, compensation and benefits, about an applicant for employment.

2. Provide that specified misdemeanor criminal provisions of existing law do not apply to this bill.

FISCAL EFFECT: According to the Senate Appropriations Committee, pursuant to Senate Rule 28.8, negligible state costs.

COMMENTS: This bill is sponsored by the California Employment Lawyers Association and the American Association of University Women who argue that our slow rate of progress on eliminating gender pay inequality is due at least in part because we have allowed employers to preserve historical inequities.

According to the sponsors, because changing jobs is often the best opportunity women have to increase their pay we need to make sure they are not penalized by prior salaries that may well have been discriminatory. They state that policies that peg current salary to prior pay by default, ignore that the prior salary earned by a male job applicant may itself be the product of sex discrimination or may reflect the residual effects of the traditionally enhanced value attached to the kind of work usually performed by men.

A coalition of employers, including the California Chamber of Commerce, opposes this bill and states that, despite the assumption that employers have accurate wage information on what the current market is for all potential job positions, they often do not. By requesting salary information, employers can adjust any unrealistic expectations or salary ranges to match the current market rate for the advertised job position. This has worked to the benefit of the applicant/employee. Opponents argue that current protections exist in law to address pay disparity and that this bill merely created additional avenues of litigation.

GOVERNOR'S VETO MESSAGE:

This bill would prohibit an employer from seeking salary information from an applicant for employment.

I agree with the sponsors that we must endeavor to ensure that all workers are paid fairly and do not receive a lower wage because of their gender or any other immutable characteristic that has no bearing on how they will perform in their job. This year, I signed SB 358 that gives California the strongest equal pay law in the nation. This bill, however, broadly prohibits employers from obtaining relevant information with little evidence that this would assure more equitable wages. Let's give SB 358 a chance to work before making further changes.

Analysis Prepared by: Ben Ebbink / L. & E. / (916) 319-2091 FN: 0002495

CONCURRENCE IN SENATE AMENDMENTS

CSA1 Bill Id:AB 1017

Author:(Campos)

As Amended Ver:August 24, 2015

Majority vote

Original Committee Reference: L. & E.

SUMMARY: Prohibits the use of employee salary history information, as specified, and enacts other requirements.

The Senate amendments:

1. Revise the bill to merely prohibit an employer from orally or in writing, personally or through an agent, from seeking salary history information, including, but not limited to, compensation and benefits, about an applicant for employment.

2. Provide that specified misdemeanor criminal provisions of existing law do not apply to this bill.

FISCAL EFFECT: According to the Senate Appropriations Committee, pursuant to Senate Rule 28.8, negligible state costs.

COMMENTS: This bill is sponsored by the California Employment Lawyers Association and the American Association of University Women who argue that our slow rate of progress on eliminating gender pay inequality is due at least in part because we have allowed employers to preserve historical inequities.

According to the sponsors, because changing jobs is often the best opportunity women have to increase their pay we need to make sure they are not penalized by prior salaries that may well have been discriminatory. They state that policies that peg current salary to prior pay by default, ignore that the prior salary earned by a male job applicant may itself be the product of sex discrimination or may reflect the residual effects of the traditionally enhanced value attached to the kind of work usually performed by men.

A coalition of employers, including the California Chamber of Commerce, opposes this bill and states that, despite the assumption that employers have accurate wage information on what the current market is for all potential job positions, they often do not. By requesting salary information, employers can adjust any unrealistic expectations or salary ranges to match the current market rate for the advertised job position. This has worked to the benefit of the applicant/employee. Opponents argue that current protections exist in law to address pay disparity and that this bill merely created additional avenues of litigation.

Analysis Prepared by: Ben Ebbink / L. & E. / (916) 319-2091 FN: 0001519

 THIRD READING  

Bill No: AB 1017

Author: Campos (D), et al.

Amended: 8/24/15 in Senate

Vote: 21

SENATE LABOR & IND. REL. COMMITTEE: 4-1, 6/24/15

AYES: Mendoza, Jackson, Leno, Mitchell

NOES: Stone

SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8

ASSEMBLY FLOOR: 42-29, 5/26/15 - See last page for vote

SUBJECT: Employers

SOURCE: Author

DIGEST: This bill prohibits the use and release of employee salary history information, as specified.

Senate Floor Amendments of 8/24/15 remove the provision of the bill that allowed the release of salary history to a prospective employer with employee written authorization and specify that the bill does not apply to information disclosable to the public pursuant to federal or state law.

ANALYSIS:

Existing law:

1. Prohibits an employer from paying an employee at wage rates less than the rates paid to employees of the opposite sex in the same establishment for equal work on jobs where the performance of which requires equal skill, effort, and responsibility and which are performed under similar working conditions, except where the payment is made pursuant to a:

1. Seniority system

2. Merit system

3. System which measures earnings by quantity or quality of production, or a differential based on any bona fide factor other than sex.

(Labor Code §1197.5)

2. States that an employer that pays or causes to be paid any employee a wage less than the rate paid to an employee of the opposite sex and is guilty of a misdemeanor and is punishable by a fine of not more than $10,000 or by imprisonment for not more than six months. (Labor Code §1199.5)

This bill:

1. Prohibits the use of employee salary history information.
   
   

2. Prohibits an employer, orally or in writing, from seeking salary history information, including compensation and benefits, from an applicant for an interview or as a condition of employment.
   
   

3. States that this section shall not apply to salary history information disclosable to the public pursuant to federal or state law, including but not limited to, the California Public Records Act or federal Freedom of Information Act.

Comments

Research on gender pay disparity. There have been numerous studies dedicated to calculating disparities in earnings between men and women in the workplace over the last 50 years. In 1963, women who worked full-time year-round made 59 cents on average for every dollar earned by a man and according to the American Association of University Women (AAUW). Today that number stands at 78% for women compared to their male counterparts, a gap of 22 cents. AAUW also ranked the wage gap for individual states in the U.S., California ranking fifth with a gap of 84%.

This gap has narrowed due to various factors, including women’s progress in education and workforce participation. A study from Francine D. Blau and Lawrence M. Khan, “The Gender Pay Gap: Have Women Gone as Far as They Can?” found that if women had the same education, experience, demographic characteristics, industrial and occupational distribution, and union coverage as men, the wage ratio would rise to about 91% of men’s wages – an 8% unexplained difference that the researchers suggest could be influenced by discrimination. A 2013 Congressional Research Service report “Pay Equity: Legislative and Legal Developments” referenced a study commissioned by the U.S. Department of Labor that used a different data source than Blau and Kahn from 2007 and a slightly different set of personal and human capital characteristic controls. The study found an unexplained earnings differential between 5% and 7%.

According to a report by the National Partnership for Women and Families, women in California earn 84 cents for each dollar earned by men (as of October 2014). California has one of the largest wage gaps for African American and Hispanic women, who make just 64 and 44 cents, respectively, for every $1 a white male makes. In 2011, the Georgetown University Center on Education and the Workforce found that college-educated women working full time earn $650,000 less than their male peers do over the course of a lifetime.

Need for this bill? According to the author, changing jobs is often the best opportunity women have to increase their pay and it is important to make sure they are not penalized by prior salaries that may have been discriminatory. The author notes policies that peg current salary to prior pay by default, ignore that the prior salary earned by a male job applicant may itself be the product of sex discrimination or may reflect the residual effects of the traditionally enhanced value attached to the kind of work usually performed by men. The courts have recognized this and have cautioned employers that salary matching can be a discriminatory practice. In Futran v. Ring Radio Co. 501 F. Supp. 734, 739 n.2 (N.D. Ga. 1980), for example, a court held that “to give more than nominal consideration to [prior pay] would serve to perpetuate the historic employment discrimination in wages suffered by females in the work force.”

The Equal Employment Opportunity Commission (EEOC) has echoed that concern, stating that prior salary history should not be the sole explanation for a wage disparity. Quoting from court decisions, the EEOC has stated “Prior salary cannot, by itself, justify a compensation disparity. This is because prior salaries of job candidates can reflect sex-based compensation discrimination. Thus, permitting prior salary alone as a justification for a compensation disparity ‘would swallow up the rule and inequality in compensation among genders would be perpetuated.’” quoting Irby v. Bittick, 44 F.3d 949, 955 (11th Cir. 1995).

This bill prohibits an employer from seeking salary history information, including compensation and benefits, from an applicant for an interview or as a condition of employment. This bill also prohibits an employer from releasing the salary history of any current or former employee to any prospective employer without written authorization from the current or former employee. The author argues that AB 1017 is intended to create a “blind” process solution to the gender pay gap issue, especially for employers that may not realize the impact of long established practices on female workers. The author states that by limiting an employer’s ability to ask about prior salary, this bill helps put men and women on more of an equal footing.

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: No

SUPPORT: (Verified 8/26/15)

9to5

American Federation of State, County and Municipal Employees, AFL-CIO

California Domestic Workers Coalition

California Employer Lawyers Association

California Labor Federation

Equal Rights Advocates

Mujeres Unidas y Activas

The Women’s Foundation of California

OPPOSITION: (Verified 8/26/15)

Air Conditioning Trade Association

Associated Builders and Contractors of California

Auto Care Association

California Association of Bed and Breakfast Inns

California Association of Winegrape Growers

California Automotive Wholesalers’ Association

California Business Properties Association

California Chamber of Commerce

California Employment Law Council

California Grocers Association

California Hotel and Lodging Association

California League of Food Processors

California Manufacturers and Technology Association

California Professional Association of Specialty Contractors

California Restaurant Association

California Travel Association

California Trucking Association

Civil Justice Association of California

El Centro Chamber of Commerce

Fairfield-Suisun City Chamber of Commerce

Fullerton Chamber of Commerce

Greater Bakersfield Chamber of Commerce

Greater Conejo Valley Chamber of Commerce

Greater Fresno Area Chamber of Commerce

National Federation of Independent Business

Rancho Cordova Chamber of Commerce

Redondo Beach Chamber of Commerce and Visitors Bureau

San Jose Silicon Valley Chamber of Commerce

Santa Maria Valley Chamber of Commerce Visitor and Convention Bureau

South Bay Association of Chambers of Commerce

Southwest California Legislative Council

The Chamber of the Santa Barbara Region

Torrance Area Chamber of Commerce

Western Electrical Contractors Association

Wine Institute

ARGUMENTS IN SUPPORT: Proponents note that a recent report from the Institute for Women’s Policy Research stated that if progress continues at its current rate, the gender wage gap will note close until 2042. Proponents argue that the current slow rate of progress could be due in part because employers are allowed to base salary decisions during the hiring process on prior salaries that could reflect historical inequities. Proponents also note that according to AAUW, the pay gap begins with a woman’s first job and from that moment forward, her past salary will hold down her future salary since salary offers consider past income. Proponents argue that removing salary history removes the inappropriate use of salary as the grading system of the working world.

Proponents contend that most employees in the private sector have no real knowledge of the value of their job or what other employees with similar jobs are making. They argue that many companies either employ or consult compensation specialists to determine the salary for a job, yet they still ask the job candidate to provide desired salary without providing a minimum salary for the job. Proponents note that the typical job applicant/candidate will provide desired salary and salary history while the employer does not provide any financial information about the job. Proponents argue that this uneven distribution of knowledge ensures the employer is able to hire at the lowest salary possible for each candidate. Proponents bring attention to a study by payscale.com that found 85% of employers use salary ranges to structure compensation programs, based on online salary data, salary surveys, association data, or consultants.

Moreover, proponents counter the opponent argument that salary data allowed employers to adjust unreasonably expectations or salary ranges to match the market rate for the position by arguing that employers can easily adjust their expectations or salary range based on the salary requested by the job application, as opposed to her prior salary, which is often an arbitrary amount based on a prior employer’s judgment that may or may not have been discriminatory. Proponents conclude that by creating a more unbiased structure for negotiating pay during the hiring process, AB 1017 will help empower women to negotiate a fair salary and hopefully get us closer to achieving pay equity in California.

ARGUMENTS IN OPPOSITION: Opponents argue that there are several legitimate, non-discriminatory reasons why employers seek information regarding prior compensation of an applicant –for example, employers may not have accurate wage information on what the current market is for all potential job positions and in competitive industries, business competitors can utilize salary data to lure talented employees from their workforce.

According to opponents, by requesting salary information, employers can adjust any unrealistic expectations or salary ranges to match the current market rate for the advertised job position. Additionally, opponents argue it can be utilized as a reference regarding whether the employee’s expectations of compensation far exceed what the employer can realistically offer.

Opponents note that the concern in question asks if the applicant’s final compensation is offered/paid compared to those in the same job category. Opponents argue that Labor Code Section 1197.5 requires an employer to provide equal pay for equal work, which Senator Jackson is seeking to strengthen through SB 358. Opponents also note that the federal Equal Pay Act, the Fair Employment and Housing Act, and Title VII preclude an employer from discriminating against an employee, including wages, on the basis of gender – arguing that there are existing protections to preclude an employer from paying a female employee less, even if the employee’s prior salary was lower than her male counterpart.

Lastly, opponents argue an employer should not be subject to litigation under the Labor Code Private Attorneys General Act Sections 2699, for inquiring into an applicant’s salary history or prior compensation when there is no ultimate harm to the applicant/employee.

ASSEMBLY FLOOR: 42-29, 5/26/15

AYES: Alejo, Bonilla, Bonta, Burke, Calderon, Campos, Chau, Chiu, Chu, Cooley, Cooper, Daly, Dodd, Eggman, Cristina Garcia, Eduardo Garcia, Gipson, Gomez, Gonzalez, Gordon, Roger Hernández, Holden, Jones-Sawyer, Levine, Lopez, Low, McCarty, Medina, Mullin, Nazarian, Quirk, Rendon, Ridley-Thomas, Rodriguez, Salas, Santiago, Mark Stone, Thurmond, Ting, Weber, Williams, Atkins

NOES: Achadjian, Travis Allen, Baker, Bigelow, Brough, Chang, Dababneh, Dahle, Beth Gaines, Gallagher, Gatto, Gray, Grove, Hadley, Irwin, Jones, Kim, Lackey, Linder, Mayes, Melendez, Obernolte, Olsen, Patterson, Steinorth, Wagner, Waldron, Wilk, Wood

NO VOTE RECORDED: Bloom, Brown, Chávez, Frazier, Harper, Maienschein, Mathis, O'Donnell, Perea

Prepared by: Deanna Ping / L. & I.R. / (916) 651-1556

8/26/15 16:51:20

**** END ****

 THIRD READING  

Bill No: AB 1017

Author: Campos (D), et al.

Amended: 7/8/15 in Senate

Vote: 21

SENATE LABOR & IND. REL. COMMITTEE: 4-1, 6/24/15

AYES: Mendoza, Jackson, Leno, Mitchell

NOES: Stone

SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8

ASSEMBLY FLOOR: 42-29, 5/26/15 - See last page for vote

SUBJECT: Employers

SOURCE: Author

DIGEST: This bill prohibits the use of employee salary history information, as specified, and enacts other requirements.

ANALYSIS:

Existing law:

1. Prohibits an employer from paying an employee at wage rates less than the rates paid to employees of the opposite sex in the same establishment for equal work on jobs where the performance of which requires equal skill, effort, and responsibility and which are performed under similar working conditions, except where the payment is made pursuant to a:

1. Seniority system

2. Merit system

3. System which measures earnings by quantity or quality of production, or a differential based on any bona fide factor other than sex.

(Labor Code §1197.5)

2. States that an employer that pays or causes to be paid any employee a wage less than the rate paid to an employee of the opposite sex and is guilty of a misdemeanor and is punishable by a fine of not more than $10,000 or by imprisonment for not more than six months. (Labor Code §1199.5)

This bill prohibits the use of employee salary history information, as specified, and enacts other requirements. Specifically, this bill:

1. Prohibits an employer, orally or in writing, from seeking salary history information, including compensation and benefits, from an applicant for an interview or as a condition of employment.

2. Prohibits an employer from releasing the salary history of any current or former employee to any prospective employer in response to a request, as part of an interview or hiring process, without written authorization from the current or former employee.

3. Makes any person violating this article guilty of a misdemeanor.

Comments

Research on gender pay disparity. There have been numerous studies dedicated to calculating disparities in earnings between men and women in the workplace over the last fifty years. In 1963, women who worked full-time year-round made 59 cents on average for every dollar earned by a man and according to the American Association of University Women (AAUW). Today that number stands at 78% for women compared to their male counterparts, a gap of 22 cents. AAUW also ranked the wage gap for individual states in the U.S., California ranking 5th with a gap of 84%.

This gap has narrowed due to various factors, including women’s progress in education and workforce participation. A study from Francine D. Blau and Lawrence M. Khan, “The Gender Pay Gap: Have Women Gone as Far as They Can?” found that if women had the same education, experience, demographic characteristics, industrial and occupational distribution, and union coverage as men, the wage ratio would rise to about 91% of men’s wages – an 8% unexplained difference that the researchers suggest could be influenced by discrimination. A 2013 Congressional Research Service report “Pay Equity: Legislative and Legal Developments” referenced a study commissioned by the U.S. Department of Labor that used a different data source than Blau and Kahn from 2007 and a slightly different set of personal and human capital characteristic controls. The study found an unexplained earnings differential between 5% and 7%.

According to a report by the National Partnership for Women and Families, women in California earn 84 cents for each dollar earned by men (as of October 2014). California has one of the largest wage gaps for African American and Hispanic women, who make just 64 and 44 cents, respectively, for every $1 a white male makes. In 2011, the Georgetown University Center on Education and the Workforce found that college-educated women working full time earn $650,000 less than their male peers do over the course of a lifetime.

Legislative effort for pay equity. On a federal level, the Equal Pay Act of 1963 prohibits covered employers from paying lower wages to female employees than male employees for “equal work” on jobs requiring “equal skill, effort, and responsibility” and performed under similar working conditions at the same location. The most recent piece of pay equity legislation signed into law by President Obama was the Lilly Ledbetter Act of 2009 which extends the time period in which an employee can file a claim to recover lost wages due to discrimination. Other pay equity bills that are under consideration at the federal level include the Paycheck Fairness Act which would provide greater wage transparency as well as the Fair Pay Act which would substitute “equivalent jobs” for the “equal” work standard.

California enacted the California Equal Pay Act in 1949 with “equal pay for equal work” language, similar to the federal Equal Pay Act of 1963. States such as Alaska, Arkansas, Idaho, Illinois, Maine, Maryland, Massachusetts, North Dakota, Oklahoma, Oregon, South Dakota, Tennessee, West Virginia, have state Equal Pay Acts with standards of equal pay for work of a substantially similar or comparable character. And according to a Fact Sheet from the Women’s Bureau 10 states, including California, have enacted state laws to address employer wage secrecy policies and increase wage transparency.

Need for this bill? According to the author, changing jobs is often the best opportunity women have to increase their pay and it is important to make sure they are not penalized by prior salaries that may have been discriminatory. The author notes policies that peg current salary to prior pay by default, ignore that the prior salary earned by a male job applicant may itself be the product of sex discrimination or may reflect the residual effects of the traditionally enhanced value attached to the kind of work usually performed by men. The courts have recognized this and have cautioned employers that salary matching can be a discriminatory practice. In Futran v. Ring Radio Co. 501 F. Supp. 734, 739 n.2 (N.D. Ga. 1980), for example, a court held that “to give more than nominal consideration to [prior pay] would serve to perpetuate the historic employment discrimination in wages suffered by females in the work force.”

The Equal Employment Opportunity Commission (EEOC) has echoed that concern, stating that prior salary history should not be the sole explanation for a wage disparity. Quoting from court decisions, the EEOC has stated “Prior salary cannot, by itself, justify a compensation disparity. This is because prior salaries of job candidates can reflect sex-based compensation discrimination. Thus, permitting prior salary alone as a justification for a compensation disparity ‘would swallow up the rule and inequality in compensation among genders would be perpetuated.’” quoting Irby v. Bittick, 44 F.3d 949, 955 (11th Cir. 1995).

This bill prohibits an employer from seeking salary history information, including compensation and benefits, from an applicant for an interview or as a condition of employment. This bill also prohibits an employer from releasing the salary history of any current or former employee to any prospective employer without written authorization from the current or former employee. The author argues that AB 1017 is intended to create a “blind” process solution to the gender pay gap issue, especially for employers that may not realize the impact of long established practices on female workers. The author states that by limiting an employer’s ability to ask about prior salary, this bill helps put men and women on more of an equal footing.

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: No

SUPPORT: (Verified 7/15/15)

9to5

American Federation of State, County and Municipal Employees, AFL-CIO

California Domestic Workers Coalition

California Employer Lawyers Association

California Labor Federation

Equal Rights Advocates

Mujeres Unidas y Activas

The Women’s Foundation of California

OPPOSITION: (Verified 7/15/15)

Air Conditioning Trade Association

Associated Builders and Contractors of California

Auto Care Association

California Association of Bed and Breakfast Inns

California Association of Winegrape Growers

California Automotive Wholesalers’ Association

California Business Properties Association

California Chamber of Commerce

California Employment Law Council

California Grocers Association

California Hotel and Lodging Association

California League of Food Processors

California Manufacturers and Technology Association

California Professional Association of Specialty Contractors

California Restaurant Association

California Travel Association

California Trucking Association

Civil Justice Association of California

El Centro Chamber of Commerce

Fairfield-Suisun City Chamber of Commerce

Fullerton Chamber of Commerce

Greater Bakersfield Chamber of Commerce

Greater Conejo Valley Chamber of Commerce

Greater Fresno Area Chamber of Commerce

National Federation of Independent Business

Rancho Cordova Chamber of Commerce

Redondo Beach Chamber of Commerce and Visitors Bureau

San Jose Silicon Valley Chamber of Commerce

Santa Maria Valley Chamber of Commerce Visitor and Convention Bureau

South Bay Association of Chambers of Commerce

Southwest California Legislative Council

The Chamber of the Santa Barbara Region

Torrance Area Chamber of Commerce

Western Electrical Contractors Association

Wine Institute

ARGUMENTS IN SUPPORT: Proponents note that a recent report from the Institute for Women’s Policy Research stated that if progress continues at its current rate, the gender wage gap will note close until 2042. Proponents argue that the current slow rate of progress could be due in part because employers are allowed to base salary decisions during the hiring process on prior salaries that could reflect historical inequities. Proponents also note that according to American Association of University Women, the pay gap begins with a woman’s first job and from that moment forward, her past salary will hold down her future salary since salary offers consider past income. Proponents argue that removing salary history removes the inappropriate use of salary as the grading system of the working world.

Proponents contend that most employees in the private sector have no real knowledge of the value of their job or what other employees with similar jobs are making. They argue that many companies either employ or consult compensation specialists to determine the salary for a job, yet they still ask the job candidate to provide desired salary without providing a minimum salary for the job. Proponents note that the typical job applicant/candidate will provide desired salary and salary history while the employer does not provide any financial information about the job. Proponents argue that this uneven distribution of knowledge ensures the employer is able to hire at the lowest salary possible for each candidate. Proponents bring attention to a study by payscale.com that found 85% of employers use salary ranges to structure compensation programs, based on online salary data, salary surveys, association data, or consultants.

Moreover, proponents counter the opponent argument that salary data allowed employers to adjust unreasonably expectations or salary ranges to match the market rate for the position by arguing that employers can easily adjust their expectations or salary range based on the salary requested by the job application, as opposed to her prior salary, which is often an arbitrary amount based on a prior employer’s judgment that may or may not have been discriminatory. Proponents conclude that by creating a more unbiased structure for negotiating pay during the hiring process, AB 1017 will help empower women to negotiate a fair salary and hopefully get us closer to achieving pay equity in California.

ARGUMENTS IN OPPOSITION: Opponents argue that there are several legitimate, non-discriminatory reasons why employers seek information regarding prior compensation of an applicant –for example, employers may not have accurate wage information on what the current market is for all potential job positions and in competitive industries, business competitors can utilize salary data to lure talented employees from their workforce.

According to opponents, by requesting salary information, employers can adjust any unrealistic expectations or salary ranges to match the current market rate for the advertised job position. Additionally, opponents argue it can be utilized as a reference regarding whether the employee’s expectations of compensation far exceed what the employer can realistically offer.

Opponents note that the concern in question asks if the applicant’s final compensation is offered/paid compared to those in the same job category. Opponents argue that Labor Code Section 1197.5 requires an employer to provide equal pay for equal work, which Senator Jackson is seeking to strengthen through SB 358. Opponents also note that the federal Equal Pay Act, the Fair Employment and Housing Act, and Title VII preclude an employer from discriminating against an employee, including wages, on the basis of gender – arguing that there are existing protections to preclude an employer from paying a female employee less, even if the employee’s prior salary was lower than her male counterpart.

Lastly, opponents argue an employer should not be subject to litigation under the Labor Code Private Attorneys General Act Sections 2699, for inquiring into an applicant’s salary history or prior compensation when there is no ultimate harm to the applicant/employee.

ASSEMBLY FLOOR: 42-29, 5/26/15

AYES: Alejo, Bonilla, Bonta, Burke, Calderon, Campos, Chau, Chiu, Chu, Cooley, Cooper, Daly, Dodd, Eggman, Cristina Garcia, Eduardo Garcia, Gipson, Gomez, Gonzalez, Gordon, Roger Hernández, Holden, Jones-Sawyer, Levine, Lopez, Low, McCarty, Medina, Mullin, Nazarian, Quirk, Rendon, Ridley-Thomas, Rodriguez, Salas, Santiago, Mark Stone, Thurmond, Ting, Weber, Williams, Atkins

NOES: Achadjian, Travis Allen, Baker, Bigelow, Brough, Chang, Dababneh, Dahle, Beth Gaines, Gallagher, Gatto, Gray, Grove, Hadley, Irwin, Jones, Kim, Lackey, Linder, Mayes, Melendez, Obernolte, Olsen, Patterson, Steinorth, Wagner, Waldron, Wilk, Wood

NO VOTE RECORDED: Bloom, Brown, Chávez, Frazier, Harper, Maienschein, Mathis, O’Donnell, Perea

Prepared by: Deanna Ping / L. & I.R. / (916) 651-1556

7/15/15 16:31:49

**** END ****

SENATE COMMITTEE ON LABOR AND INDUSTRIAL RELATIONS

Senator Tony Mendoza, Chair

2015 - 2016 Regular

Bill No: AB 1017 Hearing Date: June 24, 2015

Subject: Employers.

KEY ISSUE

Should the Legislature prohibit an employer from seeking salary history information from an applicant for an interview or as a condition of employment?

Should the Legislature prohibit an employer from releasing the salary history of any current or former employee to any prospective employer without written authorization from the current or former employee?

ANALYSIS

Existing law prohibits an employer from paying an employee at wage rates less than the rates paid to employees of the opposite sex in the same establishment for equal work on jobs where the performance of which requires equal skill, effort, and responsibility and which are performed under similar working conditions, except where the payment is made pursuant to a:

1. a seniority system

2. merit system

3. system which measures earnings by quantity or quality of production, or a differential based on any bona fide factor other than sex.

(Labor Code §1197.5)

Existing law states that an employer that pays or causes to be paid any employee a wage less than the rate paid to an employee of the opposite sex and is guilty of a misdemeanor and is punishable by a fine of not more than ten thousand dollars or by imprisonment for not more than six months. (Labor Code §1199.5)

This Bill prohibits the use of employee salary history information, as specified, and enacts other requirements. Specifically, this bill:

1. Prohibits an employer, orally or in writing, from seeking salary history information, including compensation and benefits, from an applicant for an interview or as a condition of employment.

2. Prohibits an employer from releasing the salary history of any current or former employee to any prospective employer in response to a request, as part of an interview or hiring process, without written authorization from the current or former employee.

3. Would make any person violating this article guilty of a misdemeanor.

COMMENTS

1. Research on Gender Pay Disparity

There have been numerous studies dedicated to calculating disparities in earnings between men and women in the workplace over the last fifty years. In 1963, women who worked full-time year-round made 59 cents on average for every dollar earned by a man and according to the American Association of University Women (AAUW). Today that number stands at 78 percent for women compared to their male counterparts, a gap of 22 cents. AAUW also ranked the wage gap for individual states in the US, California ranking 5^th with a gap of 84 percent.

This gap has narrowed due to various factors, including women’s progress in education and workforce participation. A study from Francine D. Blau and Lawrence M. Khan, “The Gender Pay Gap: Have Women Gone as Far as They Can?” found that if women had the same education, experience, demographic characteristics, industrial and occupational distribution, and union coverage as men, the wage ratio would rise to about 91 percent of men’s wages – an 8 percent unexplained difference that the researchers suggest could be influenced by discrimination. A 2013 Congressional Research Service report “Pay Equity: Legislative and Legal Developments” referenced a study commissioned by the U.S. Department of Labor that used a different data source than Blau and Kahn from 2007 and a slightly different set of personal and human capital characteristic controls. The study found an unexplained earnings differential between 5 and 7 percent.

According to a report by the National Partnership for Women & Families, women in California earn 84 cents for each dollar earned by men (as of October 2014). California has one of the largest wage gaps for African American and Hispanic women, who make just 64 and 44 cents, respectively, for every $1 a white male makes. In 2011, the Georgetown University Center on Education and the Workforce found that college-educated women working full time earn $650,000 less than their male peers do over the course of a lifetime.

2. Legislative Effort for Pay Equity

On a federal level, the Equal Pay Act of 1963 prohibits covered employers from paying lower wages to female employees than male employees for “equal work” on jobs requiring “equal skill, effort, and responsibility” and performed under similar working conditions at the same location. The most recent piece of pay equity legislation signed into law by President Obama was the Lilly Ledbetter Act of 2009 which extends the time period in which an employee can file a claim to recover lost wages due to discrimination. Other pay equity bills that are under consideration at the federal level include the Paycheck Fairness Act which would provide greater wage transparency as well as the Fair Pay Act which would substitute “equivalent jobs” for the “equal” work standard.

California enacted the California Equal Pay Act in 1949 with “equal pay for equal work” language, similar to the federal Equal Pay Act of 1963. States such as Alaska, Arkansas, Idaho, Illinois, Maine, Maryland, Massachusetts, North Dakota, Oklahoma, Oregon, South Dakota, Tennessee, West Virginia, have state Equal Pay Acts with standards of equal pay for work of a substantially similar or comparable character. And according to a Fact Sheet from the Women’s Bureau ten states, including California, have enacted state laws to address employer wage secrecy policies and increase wage transparency.

3. Need for this bill?

According to the author, changing jobs is often the best opportunity women have to increase their pay and it is important to make sure they are not penalized by prior salaries that may have been discriminatory. The author notes policies that peg current salary to prior pay by default, ignore that the prior salary earned by a male job applicant may itself be the product of sex discrimination or may reflect the residual effects of the traditionally enhanced value attached to the kind of work usually performed by men. The courts have recognized this and have cautioned employers that salary matching can be a discriminatory practice. In Futran v. Ring Radio Co. 501 F. Supp. 734, 739 n.2 (N.D. Ga. 1980), for example, a court held that “to give more than nominal consideration to [prior pay] would serve to perpetuate the historic employment discrimination in wages suffered by females in the work force.”

The Equal Employment Opportunity Commission (EEOC) has echoed that concern, stating that prior salary history should not be the sole explanation for a wage disparity. Quoting from court decisions, the EEOC has stated "Prior salary cannot, by itself, justify a compensation disparity. This is because prior salaries of job candidates can reflect sex-based compensation discrimination. Thus, permitting prior salary alone as a justification for a compensation disparity ‘would swallow up the rule and inequality in compensation among genders would be perpetuated.’ quoting Irby v. Bittick, 44 F.3d 949, 955 (11th Cir. 1995).

This bill would prohibit an employer from seeking salary history information, including compensation and benefits, from an applicant for an interview or as a condition of employment. This bill would also prohibit an employer from releasing the salary history of any current or former employee to any prospective employer without written authorization from the current or former employee. The author argues that AB 1017 is intended to create a ‘blind’ process solution to the gender pay gap issue, especially for employers that may not realize the impact of long established practices on female workers. The author states that by limiting an employer’s ability to ask about prior salary, we help put men and women on more of an equal footing.

4. Proponent Arguments:

Proponents note that a recent report from the Institute for Women’s Policy Research stated that if progress continues at its current rate, the gender wage gap will note close until 2042. Proponents argue that the current slow rate of progress could be due in part because employers are allowed to base salary decisions during the hiring process on prior salaries that could reflect historical inequities. Proponents also note that according to American Association of University Women, the pay gap begins with a woman’s first job and from that moment forward, her past salary will hold down her future salary since salary offers consider past income. Proponents argue that removing salary history removes the inappropriate use of salary as the grading system of the working world.

Proponents contend that most employees in the private sector have no real knowledge of the value of their job or what other employees with similar jobs are making. They argue that many companies either employ or consult compensation specialists to determine the salary for a job, yet they still ask the job candidate to provide desired salary without providing a minimum salary for the job. Proponents note that the typical job applicant/candidate will provide desired salary and salary history while the employer does not provide any financial information about the job. Proponents argue that this uneven distribution of knowledge ensures the employer is able to hire at the lowest salary possible for each candidate. Proponents bring attention to a study by payscale.com that found 85 percent of employers use salary ranges to structure compensation programs, based on online salary data, salary surveys, association data, or consultants.

Moreover, proponents counter the opponent argument that salary data allowed employers to adjust unreasonably expectations or salary ranges to match the market rate for the position by arguing that employers can easily adjust their expectations or salary range based on the salary requested by the job application, as opposed to her prior salary, which is often an arbitrary amount based on a prior employer’s judgment that may or may not have been discriminatory. Proponents conclude that by creating a more unbiased structure for negotiating pay during the hiring process, AB 1017 will help empower women to negotiate a fair salary and hopefully get us closer to achieving pay equity in California.

5. Opponent Arguments:

Opponents argue that there are several legitimate, non-discriminatory reasons why employers seek information regarding prior compensation of an applicant –for example, employers may not have accurate wage information on what the current market is for all potential job positions and in competitive industries, business competitors can utilize salary data to lure talented employees from their workforce.

According to opponents, by requesting salary information, employers can adjust any unrealistic expectations or salary ranges to match the current market rate for the advertised job position. Additionally, opponents argue it can be utilized as a reference regarding whether the employee’s expectations of compensation far exceed what the employer can realistically offer.

Opponents note that the concern in question asks if the applicant’s final compensation is offered/paid compared to those in the same job category. Opponents argue that Labor Code Section 1197.5 requires an employer to provide equal pay for equal work, which Senator Jackson is seeking to strengthen through SB 358. Opponents also note that the federal Equal Pay Act, the Fair Employment and Housing Act, and Title VII preclude an employer from discriminating against an employee, including wages, on the basis of gender – arguing that there are existing protections to preclude an employer from paying a female employee less, even if the employee’s prior salary was lower than her male counterpart.

Lastly, opponents argue an employer should not be subject to litigation under the Labor Code Private Attorneys General Act (PAGA) Sections 2699, for inquiring into an applicant’s salary history or prior compensation when there is no ultimate harm to the applicant/employee.

6. Prior Legislation:

SB 358 of 2015 (Jackson) – would prohibits an employer from paying any employee at wage rates less than the rates paid to employees of the opposite sex for work of a comparable character on jobs the performance of which requires comparable skills, effort, and responsibility, and that are performed under similar working conditions and remove the ‘any bona fide factor other than sex’ exception to instead a bona fide factor with a business necessity.

AB 2555 of 2006 (Oropeza) – would have increased the damages for which an employer may be liable for gender-based pay discrimination and impose a civil penalty for violations of law, as specified; establish a state Equal Pay Commission as specified; require employers of 50 or more to provide each employee with a written job statement. This bill was vetoed by Governor Schwarzenegger.

AB 169 of 2005 (Oropeza) – would have increased the amount of liquidated damages due to employees who are paid unfairly in violation of existing law relating to gender-based payment discrimination. This bill was vetoed by Governor Schwarzenegger.

AB 2317 of 2004 (Oropeza) –would have increased the amount of liquidated damages paid for violations of state law prohibiting gender-based pay discrimination. This bill was vetoed by Governor Schwarzenegger.

SUPPORT

American Federation of State, County and Municipal Employees, AFL-CIO

California Employment Lawyers Association

OPPOSITION

California Chamber of Commerce

Air Conditioning Trade Association

Associated Builders and Contractors of California

Auto Care Association

California Association of Bed and Breakfast Inns

California Association of Winegrape Growers

California Business Properties Association

California Employment Law Council

California Grocers Association

California Hotel and Lodging Association

California League of Food Processors

California Manufacturers and Technology Association

California Restaurant Association

California Professional Association of Specialty Contractors

California Travel Association

California Trucking Association

CAWA – Representing the Automotive Parts Industry

Civil Justice Association of California

El Centro Chamber of Commerce

Fairfield-Suisun City Chamber of Commerce

Fullerton Chamber of Commerce

Greater Bakersfield Chamber of Commerce

Greater Conejo Valley Chamber of Commerce

Greater Fresno Area Chamber of Commerce

National Federation of Independent Business

Rancho Cordova Chamber of Commerce

Redondo Beach Chamber of Commerce and Visitors Bureau

San Jose Silicon Valley Chamber of Commerce

Santa Maria Valley Chamber of Commerce Visitor and Convention Bureau

South Bay Association of Chambers of Commerce

Southwest California Legislative Council

The Chamber of the Santa Barbara Region

Torrance Area Chamber of Commerce

Western Electrical Contractors Association

Wine Institute

-- END --

ASSEMBLY THIRD READING

ATR Bill Id:AB 1017

Author:(Campos)

As Amended Ver:May 18, 2015

Majority vote

SUMMARY: Prohibits the use of employee salary history information, as specified, and enacts other requirements. Specifically, this bill:

1. Prohibits an employer from seeking salary history information, including compensation and benefits, from an applicant for employment for an interview or as a condition of employment.

2. Prohibits an employer from releasing the salary history of any current or former employee to any prospective employer without written authorization from the current or former employee.

FISCAL EFFECT: According to the Assembly Appropriations Committee, this bill has no direct state impact as this bill does not mandate enforcement by the Labor Commissioner nor provide for a civil penalty for employers who violate the provisions of this bill.

COMMENTS: This bill is sponsored by the California Employment Lawyers Association and the American Association of University Women who argue that our slow rate of progress on eliminating gender pay inequality is due at least in part because we have allowed employers to preserve historical inequities.

According to the sponsors, because changing jobs is often the best opportunity women have to increase their pay we need to make sure they are not penalized by prior salaries that may well have been discriminatory. They state that policies that peg current salary to prior pay by default, ignore that the prior salary earned by a male job applicant may itself be the product of sex discrimination or may reflect the residual effects of the traditionally enhanced value attached to the kind of work usually performed by men.

A coalition of employers, including the California Chamber of Commerce, opposes this bill and states that, despite the assumption that employers have accurate wage information on what the current market is for all potential job positions, they often do not. By requesting salary information, employers can adjust any unrealistic expectations or salary ranges to match the current market rate for the advertised job position. This has worked to the benefit of the applicant/employee. Opponents argue that current protections exist in law to address pay disparity and that this bill merely created additional avenues of litigation.

Analysis Prepared by: Benjamin Ebbink / L. & E. / (916) 319-2091 FN: 0000427

ASSEMBLY THIRD READING

ATR Bill Id:AB 1017

Author:(Campos)

As Amended Ver:April 16, 2015

Majority vote

SUMMARY: Prohibits the use of employee salary history information, as specified, and enacts other requirements. Specifically, this bill:

1. Provides that an employer shall not publish or list an advertisement to recruit candidates for hire without including the minimum rate of pay, including overtime, as specified.

2. Prohibits an employer from paying wages for a position less than what were advertised.

3. Prohibits an employer from seeking salary history information, including compensation and benefits, from an applicant for employment for an interview or as a condition of employment.

4. Prohibits an employer from releasing the salary history of any current or former employee to any prospective employer without written authorization from the current or former employee.

FISCAL EFFECT: According to the Assembly Appropriations Committee, this bill has no direct state impact as this bill does not mandate enforcement by the Labor Commissioner nor provide for a civil penalty for employers who violate the provisions of this bill.

COMMENTS: This bill is sponsored by the California Employment Lawyers Association and the American Association of University Women (AAUW), who argue that our slow rate of progress on eliminating gender pay inequality is due at least in part because we have allowed employers to preserve historical inequities.

According to the sponsors, because changing jobs is often the best opportunity women have to increase their pay we need to make sure they are not penalized by prior salaries that may well have been discriminatory. They state that policies that peg current salary to prior pay by default, ignore that the prior salary earned by a male job applicant may itself be the product of sex discrimination or may reflect the residual effects of the traditionally enhanced value attached to the kind of work usually performed by men.

A coalition of employers, including the California Chamber of Commerce, opposes this bill and states that eliminating an employer's ability to adjust the minimum rate of pay once posted in an advertisement will limit an employer's flexibility to offer an employee a position who may not meet all of the qualifications of the job. In addition, they contend that, despite the assumption that employers have accurate wage information on what the current market is for all potential job positions, they often do not. By requesting salary information, employers can adjust any unrealistic expectations or salary ranges to match the current market rate for the advertised job position. This has worked to the benefit of the applicant/employee. Opponents argue that current protections exist in law to address pay disparity and that this bill merely created additional avenues of litigation.

Analysis Prepared by: Ben Ebbink / L. & E. / (916) 319-2091 FN: 0000371

Date of Hearing: May 13, 2015

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Jimmy Gomez, Chair

ABPCA Bill Id:AB 1017

Author:(Campos) – As Amended Ver:April 16, 2015

Urgency: No State Mandated Local Program: Yes Reimbursable: No

SUMMARY:

This bill prohibits an employer from publishing or listing an advertisement to recruit candidates for hire without including the minimum rate of pay, including overtime. Specifically, this bill

1. Prohibits an employer from paying wages for a position less than what were advertised.
   
   

2. Prohibits an employer from seeking salary history information, including compensation and benefits, from an applicant for employment for an interview or as a condition of employment.
   
   

3. Prohibits an employer from releasing the salary history of any current or former employee to any prospective employer without written authorization from the current or former employee.

FISCAL EFFECT:

No direct state impact as the bill does not mandate enforcement by the Labor Commissioner nor provide for a civil penalty for employers who violate provisions of this bill.

COMMENTS:

1. Purpose. According to research from the Institute for Women's Policy Research (IWPR), in 2013, female full-time workers made only 78 cents for every dollar earned by men, a gender wage gap of 22 percent. According to a report by the National Partnership for Women & Families, women in California earn 84 cents for each dollar earned by men (as of October 2014). California has one of the largest wage gaps for African American and Hispanic women, who make just 64 and 44 cents, respectively, for every $1 a white male makes. In 2011, the Georgetown University Center on Education and the Workforce found that college-educated women working full time earn $650,000 less than their male peers do over the course of a lifetime.

This bill is sponsored by the California Employment Lawyers Association and the American Association of University Women (AAUW), who state that the slow rate of progress on eliminating gender pay inequality is due, at least in part, to allowing employers to preserve historical inequities. Policies that peg current salary to prior pay, by default, they state, ignore that the prior salary earned by a male job applicant may itself be the product of sex discrimination or may reflect the residual effects of the traditionally enhanced value attached to the kind of work usually performed by men. 

Employers already are prohibited from asking certain questions from job applicants, such as marital status, religion or medical history. This kind of information is simply not relevant and could allow employers to discriminate. The sponsors contend that, similarly, pay history is only relevant to the extent it allows employers to determine how low they can drive the bargain. They argue that if we truly want to eliminate the vestiges of pay discrimination, then we cannot allow salary decisions across the job market to be built upon a history of unfair pay. They contend that it’s time we put an end to this prejudicial hiring practice and give women a better chance to negotiate a fair deal.

2. Opposition. The California Chamber of Commerce and several employers oppose this bill based on concerns that eliminating an employer’s ability to adjust the minimum rate of pay once posted in an advertisement will limit an employer’s flexibility to offer an employee a position who may not meet all of the qualifications of the job. Further, they state, employers determine the appropriate wage and salary to pay an applicant based upon various factors, including skill, education, prior experience, as well as the funding available for the job. Setting forth an artificial minimum rate of pay for a job position will not change this employer determination. The opposition also states California has numerous protections in place to encourage equitable pay for equitable work. Specifically, Labor Code Section 232 already precludes an employer from preventing an employee from disclosing his or her wages. Labor Code Section 1197.5 mandates an employer provide equal wages for equal work. The Fair Employment and Housing Act (FEHA) precludes any discrimination in the workplace based upon various protected classifications, including gender.

Analysis Prepared by: Misty Feusahrens / APPR. / (916) 319-2081

Date of Hearing: April 30, 2015

ASSEMBLY COMMITTEE ON LABOR AND EMPLOYMENT

Roger Hernández, Chair

ABPCA Bill Id:AB 1017

Author:(Campos) – As Amended Ver:April 16, 2015

SUBJECT: Employers

SUMMARY: Prohibits the use of employee salary history information, as specified, and enacts other requirements. Specifically, this bill:

1. Provides that an employer shall not publish or list an advertisement to recruit candidates for hire without including the minimum rate of pay, including overtime, as specified.
   
   

2. Prohibits an employer from paying wages for a position less than what were advertised.
   
   

3. Prohibits an employer from seeking salary history information, including compensation and benefits, from an applicant for employment for an interview or as a condition of employment.
   
   

4. Prohibits an employer from releasing the salary history of any current or former employee to any prospective employer without written authorization from the current or former employee.

EXISTING LAW:

1. Generally prohibits an employer from paying an employee at wage rates less than the rates paid to employees of the opposite sex in the same establishment for equal work on jobs the performance of which requires equal skill, effort, and responsibility, and which are performed under similar working conditions.

2. Establishes exceptions to that prohibition where the payment is made pursuant to a seniority system, a merit system, a system which measures earnings by quantity or quality of production, or a differential based on any bona fide factor other than sex.

3. Makes it a misdemeanor for an employer or other person acting either individually or as an officer, agent, or employee of another person to pay or cause to be paid to any employee a wage less than the rate paid to an employee of the opposite sex as required by these provisions, or who reduces the wages of any employee in order to comply with these provisions.

FISCAL EFFECT: Unknown

COMMENTS: This bill is sponsored by the California Employment Lawyers Association and the American Association of University Women (AAUW), who argue that our slow rate of progress on eliminating gender pay inequality is due at least in part because we have allowed employers to preserve historical inequities.

Recent Research on the Pay Gap

According to research from the Institute for Women's Policy Research (IWPR), in 2013, female full-time workers made only 78 cents for every dollar earned by men, a gender wage gap of 22 percent. They conclude that if change continues at the same pace, it will take 44 years – or until 2058 – for women to reach pay parity. In California, the gap will close in 2042.

According to a report by the National Partnership for Women & Families, women in California earn 84 cents for each dollar earned by men (as of October 2014). California has one of the largest wage gaps for African American and Hispanic women, who make just 64 and 44 cents, respectively, for every $1 a white male makes.

In 2011, the Georgetown University Center on Education and the Workforce found that college-educated women working full time earn $650,000 less than their male peers do over the course of a lifetime.

Do Inquiries Into Salary History Perpetuate Inequality?

According to the sponsors, because changing jobs is often the best opportunity women have to increase their pay we need to make sure they are not penalized by prior salaries that may well have been discriminatory.

They state that policies that peg current salary to prior pay by default, ignore that the prior salary earned by a male job applicant may itself be the product of sex discrimination or may reflect the residual effects of the traditionally enhanced value attached to the kind of work usually performed by men.  Recognizing these facts, courts have cautioned employers that salary matching is frequently discriminatory.  In Futran v. Ring Radio Co. 501 F. Supp. 734, 739 n.2 (N.D. Ga. 1980), for example, a court held that “to give more than nominal consideration to [prior pay] would serve to perpetuate the historic employment discrimination in wages suffered by females in the work force.” 

The Equal Employment Opportunity Commission (EEOC) has echoed that concern, stating that prior salary history should not be the sole explanation for a wage disparity.  Quoting from court decisions, the EEOC has stated "Prior salary cannot, by itself, justify a compensation disparity. This is because prior salaries of job candidates can reflect sex-based compensation discrimination. Thus, permitting prior salary alone as a justification for a compensation disparity ‘would swallow up the rule and inequality in compensation among genders would be perpetuated.’   quoting Irby v. Bittick, 44 F.3d 949, 955 (11th Cir. 1995). See also Glenn v. General Motors Corp., 841 F.2d 1567, 1571 (11th Cir. 1988) (prior salary alone cannot justify a pay disparity); Faust v. Hilton Hotels Corp., 1990 WL 120615, at *5 (E.D. La. 1990) (reliance on prior salary as a factor other than sex would "allow employer to pay one employee more than an employee of the opposite sex because that employer or a previous employer discriminated against the lower paid employee").

Critics contend that the impact of prior salaries is particularly concerning in certain industries and across racial lines. For example, women in Silicon Valley with advanced degrees are making more than 70 percent less than men with the same degrees. In addition, California has one of the largest wage gaps for African American and Hispanic women, who make just 64 and 44 cents, respectively, for every $1 a white man makes. These depressed salaries only serve to devalue a woman’s worth and make it harder for her to negotiate better pay.

On the contrary, by limiting an employer’s ability to ask about prior salary, we help put men and women on more of an equal footing. Employers already are prohibited from asking certain questions from job applicants, such as marital status, religion or medical history. This kind of information is simply not relevant and could allow employers to discriminate.

The sponsors contend that, similarly, pay history is only relevant to the extent it allows employers to determine how low they can drive the bargain.

They argue that if we truly want to eliminate the vestiges of pay discrimination, then we cannot allow salary decisions across the job market to be built upon a history of unfair pay. They contend that it’s time we put an end to this prejudicial hiring practice and give women a better chance to negotiate a fair deal.

Specific Changes Proposed by This Bill – And Proffered Rationale in Support

First, this bill would prohibit an employer from seeking salary history information, including compensation and benefits, from an applicant for employment for an interview or as a condition of employment. This bill would also prohibit an employer from releasing the salary history of any current or former employee to any prospective employer without written authorization from the current or former employee.

As discussed above, the sponsors contend that this would create a “blind process” solution to the gender pay gap issue. According to AAUW, the pay gap begins with a woman’s first job.  From that moment forward, her past salary will hold down her future salary since salary offers consider past income.  Often this is done by adding 10-15 percent to the previous pay. Removing salary history removes the inappropriate use of salary as the grading system of the working world.

Second, this bill would provide that an employer shall not publish or list an advertisement for hire without including the minimum rate of pay, including overtime, as specified. This bill also prohibits an employer from paying wages for a position less than what were advertised.

The sponsors contend that most employees in the private sector have no real knowledge of the value of their job or what other employees with similar jobs are making. Many companies either employ or consult compensation specialists to determine the salary for a job yet they still ask the job candidate to provide desired salary without providing a minimum salary for the job. The typical job applicant/candidate will provide desired salary and salary history while the employer does not provide any financial information about the job. This uneven distribution of knowledge ensures the employer is able to hire at the lowest salary possible for each candidate.

Moreover, the sponsors contend that this too perpetuates gender pay inequality. They state that research done by Linda Babcock at Carnegie Mellon University shows that men state salaries 30 percent higher than women when negotiating.  Since many non-government jobs do not include any pay information, the negotiation starts when asked to state a desired salary.  On average, men will set forth a desired salary 30 percent higher number then women.

ARGUMENTS IN OPPOSITION  

A coalition of employers, including the California Chamber of Commerce, opposes this measure and states the following:

"Limits Candidates Ability to Obtain Job Opportunities:

[This bill] prohibits an employer from posting a job advertisement unless the advertisement sets forth a minimum rate of pay for the position and states that an employer cannot pay below the advertised rate. Eliminating an employer’s ability to adjust the minimum rate of pay once posted in an advertisement will limit an employer’s flexibility to offer an employee a position who may not meet all of the qualifications of the job. Many employers who interview candidates may find that the employee is not adequately qualified for the position posted, but nonetheless would like to offer him/her employment at a lesser compensation to allow the individual to gain the experience, skills, and training necessary. For example, recent college graduates, long-term unemployed individuals, or first time employees in the marketplace, may not have the requested qualifications that justify the stated minimum level of compensation, but yet employers would like to give them a job opportunity. [This bill] would preclude an employer from offering such an applicant the position at a lower rate, which will limit such applicants’ employment opportunities.

[This Bill] Does Not Create Transparency or Address Wage Disparity:

Employers determine the appropriate wage and salary to pay an applicant based upon various factors, including skill, education, prior experience, as well as the funding available for the job. Setting forth an artificial minimum rate of pay for a job position will not change this employer determination. Moreover, employers may feel compelled to reduce the minimum rate of pay in an advertisement in order to create sufficient room to adjust that rate depending on the various factors and varied candidates for the job. Accordingly, [this bill] will not provide transparency into the rate of pay ultimately offered to the applicant for the job position.

Moreover, to the extent women actually undervalue their work and skills, forcing an employer to set forth an artificial minimum rate of pay may do more harm than good. An employee, who undervalues his or her work, is not anymore likely to negotiate for a higher amount from his or her former employment than from an artificial minimum wage rate under [this bill]. Accordingly, that same employee is either going to: (1) experience the same potential set back in compensation as he or she does now; or (2) experience a more significant setback if the applicant assumes that the minimum rate of pay is the final amount the employer is willing to compensate for the position.

Disclosure of wage rates or salary ranges for a job position or even disclosure of actual compensation of wages has not been proven to address gender equity pay. In a Sacramento Bee article dated March 28, 2015, it detailed findings that, despite disclosing actual compensation of all employees, women staff in the California Legislature actually made less than male staff.

Salary Information Can Increase Wages:

Despite the assumption that employers have accurate wage information on what the current market is for all potential job positions, they often do not. By requesting salary information, employers can adjust any unrealistic expectations or salary ranges to match the current market rate for the advertised job position. This has worked to the benefit of the applicant/employee.

Posting a Minimum Commission or Piece Rate in A Job Advertisement Is Unreasonable:

Unlike a minimum hourly rate, a commission or piece rate is primarily based upon employee output. Accordingly, forcing an employer to identify a minimum commission or piece rate in a job advertisement that cannot be adjusted is simply unreasonable.

Current Protections Exist to Address Pay Disparity:

California has numerous protections in place to encourage equitable pay for equitable work. Specifically, Labor Code Section 232 already precludes an employer from preventing an employee from disclosing his or her wages. Labor Code Section 1197.5 mandates an employer provide equal wages for equal work. The Fair Employment and Housing Act (FEHA) precludes any discrimination in the workplace based upon various protected classifications, including gender. These existing protections are likely what contributed to California being ranked as one of the top 5 states for gender equity in pay in the 2013 report issued by American Association of University of Women (AAUW).

Additional Avenue of Litigation:

To the extent that forcing employers to set forth a minimum wage rate in their advertisement does not provide any actual transparency or equity in pay, [this bill] represents another mandate on employers that will subject them to potential litigation under the Labor Code Private Attorney General Act (PAGA), with statutory penalties and employee-only attorney’s fees. Exposing employers to additional threats of litigation for failing to set forth a minimum rate of pay for a commission or piece rate, or that includes overtime, as well as credits for meal and lodging, is an unnecessary increase in doing business."

REGISTERED SUPPORT / OPPOSITION:

Support

American Federation of State, County and Municipal Employees

California Employment Lawyers Association

California Immigrant Policy Center

California Labor Federation, AFL-CIO

Equal Rights Advocates

Opposition

Air Conditioning Trade Association

Associated Builders and Contractors of California

California Association of Bed and Breakfast Inns

California Association of Winegrape Growers

California Chamber of Commerce

California Employment Law Council

California Grocers Association

California Hotel and Lodging Association

California Manufacturers and Technology Association

California Newspaper Publishers Association

California Professional Association of Specialty Contractors

California Trucking Association

El Centro Chamber of Commerce

Fairfield-Suisun City Chamber of Commerce

Fullerton Chamber of Commerce

Greater Bakersfield Chamber of Commerce

Greater Conejo Valley Chamber of Commerce

Greater Fresno Area Chamber of Commerce

National Federation of Independent Business

San Jose Silicon Valley Chamber of Commerce

Santa Maria Valley Chamber of Commerce Visitor and Convention Bureau

Southwest California Legislative Council

The Chamber of the Santa Barbara Region

Western Electrical Contractors Association

Wine Institute

Analysis Prepared by: Ben Ebbink / L. & E. / (916) 319-2091