(1)Existing law prohibits an employer from relying on the salary history information of an applicant for employment as a factor in determining whether to offer an applicant employment or what salary to offer an applicant, except in specified circumstances. Existing law requires an employer, upon reasonable request, to provide the pay scale for a position to an applicant applying for employment.

This bill would define pay scale, reasonable request, and applicant for purposes of these provisions. The bill would specify that these provisions do not prohibit an employer from asking about an applicant for employments salary expectation for the position being applied for.

(2)Existing law prohibits an employer from paying any of its employees at wage rates less than the rates paid to employees of the opposite sex for substantially similar work, when viewed as a composite of skill, effort, and responsibility, and performed under similar working conditions, unless the employer demonstrates that one or more specific factors, reasonably applied, account for the entire wage differential. Existing law also similarly prohibits an employer from paying any of its employees at wage rates less than the rates paid to employees of another race or ethnicity for substantially similar work. Existing law prohibits prior salary, by itself, from justifying a disparity in compensation under these provisions.

This bill would authorize an employer to make a compensation decision based on an employees current salary as long as any wage differential resulting from that compensation decision is justified by one or more specified factors, including a seniority system or a merit system.

(1)Existing law prohibits an employer from relying on the salary history information of an applicant for employment as a factor in determining whether to offer an applicant employment or what salary to offer an applicant, except in specified circumstances. Existing law requires an employer, upon reasonable request, to provide the pay scale for a position to an applicant applying for employment.

This bill would define pay scale, reasonable request, and applicant for purposes of these provisions. The bill would specify that these provisions do not prohibit an employer from asking about an applicant for employments salary expectation for the position being applied for.

(2)Existing law prohibits an employer from paying any of its employees at wage rates less than the rates paid to employees of the opposite sex for substantially similar work, when viewed as a composite of skill, effort, and responsibility, and performed under similar working conditions, unless the employer demonstrates that one or more specific factors, reasonably applied, account for the entire wage differential. Existing law also similarly prohibits an employer from paying any of its employees at wage rates less than the rates paid to employees of another race or ethnicity for substantially similar work. Existing law prohibits prior salary, by itself, from justifying a disparity in compensation under these provisions.

This bill would authorize an employer to make a compensation decision based on an employees current salary as long as any wage differential resulting from that compensation decision is justified by one or more specified factors, including a seniority system or a merit system.

(1)Existing law prohibits an employer from relying on the salary history information of an applicant for employment as a factor in determining whether to offer an applicant employment or what salary to offer an applicant, except in specified circumstances. Existing law requires an employer, upon reasonable request, to provide the pay scale for a position to an applicant applying for employment.

Existing law prohibits an employer from relying on the salary history information of an applicant for employment as a factor in determining whether to offer an applicant employment or what salary to offer an applicant, except in specified circumstances.

This bill would make a nonsubstantive change to this provision.

 THIRD READING  

Bill No: AB 2282

Author:

:

Vote:

SENATE LABOR & IND. REL. COMMITTEE: 5-0, 6/13/18

AYES: Lara, Stone, Jackson, Mitchell, Wieckowski

SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8

ASSEMBLY FLOOR: 73-0, 5/17/18 (Consent) - See last page for vote

SUBJECT:

SOURCE: American Association of University Women

California Employment Lawyers Association

Equal Rights Advocates

DIGEST:

This bill makes clarifying changes to the existing provisions regarding the use of a job applicant’s prior salary to prohibit use of prior salary to justify any disparity in compensation. This bill also clarifies that an employer may make a compensation decision based on a current employee’s existing salary, so long as the wage differential resulting from that compensation decision is justified by other specified factors in current law. This bill also specifies that the prohibition on asking a job applicant about prior salary does not forbid an employer from asking the applicant about his or her salary expectations for the position being applied for.

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 or of a different race or ethnicity for substantially similar work, when viewed as a composite of skill, effort, and responsibility, and performed under similar working conditions. (Labor Code §1197.5)
2. Establishes exceptions to these prohibitions where the employer demonstrates the payment is made pursuant to:
   1. a seniority system;
   2. a merit system;
   3. a system which measures earnings by quantity or quality of production; and
   4. a bona fide factor other than sex, race or ethnicity, such as education, training, or experience which applies only if the employer demonstrates the factor is not based on or derived from a sex, race or ethnicity based pay differential, is job related, and is consistent with a business necessity, as defined.
3. Specifies that prior salary cannot, by itself, justify any disparity in compensation.
4. Makes it a misdemeanor, punishable by a fine of up to $10,000 and/or by imprisonment, or both, for an employer or other person, as specified, to pay or cause to be paid to any employee a wage less than the rate paid to an employee of the opposite sex, race or ethnicity, or who reduces the wages of any employee in order to comply with wage protections per Labor Code Section 1197.5. (Labor Code §1199.5)
5. Prohibits an employer, including the state, local government and the Legislature, from relying on the salary history information of an applicant for employment as a factor in determining whether to offer employment to an applicant or what salary to offer an applicant, except for information disclosable to the public by law. (Labor Code §432.3)
6. Requires an employer, upon reasonable request, to provide the pay scale for a position to an applicant applying for employment.
7. Does not prohibit an applicant from voluntarily and without prompting disclosing salary history information to a prospective employer, and that employer from considering that information in determining the salary for that applicant.

This bill:

1. Defines the following terms for purposes of clarifying the above mentioned provisions regarding prior salary inquiries:
   1. “Pay scale” means a salary or hourly wage range.
   2. “Reasonable request” means a request made after an applicant has completed an initial interview with the employer.
   3. “Applicant” or “applicant for employment” means an individual who is seeking employment with the employer and is not currently employed with that employer in any capacity or position.
2. Specifies that the prohibition on asking a job applicant about prior salary does not forbid an employer from asking the applicant about his or her salary expectations for the position being applied for.
3. Prohibits prior salary from justifying a disparity in pay based on sex, race or ethnicity.
4. Excludes from the above prohibition a compensation decision based on a current employee’s existing salary, so long as any wage differential resulting from that compensation decision is justified by one or more specified factors under Labor Code §1197.5, including a seniority system or a merit system.

Background

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. According to the American Association of University Women (AAUW), in 1963 women who worked full-time made 59 cents on average for every dollar earned by a man. Today, women working full time in the United States are typically paid 80 percent of what men are paid, a gap of 20 cents. (The Simple Truth about the Gender Pay Gap, 2017 Edition, AAUW)

The wage gap is even larger for women of color. According to the National Partnership for Women & Families, among women who hold full-time, year-round jobs in the United States, Black women are typically paid 63 cents for every dollar paid to white men, while Latinas are paid just 54 cents for every dollar. Asian women are paid 85 cents for every dollar paid to white men, although some ethnic subgroups of Asian women fare much worse. (America’s Women and the Wage Gap, National Partnership for Women & Families, April 2017)

Research finds that the gender pay gap has lifelong financial effects. According to the AAUW, at a time when 40 percent of mothers with children under the age of 18 are their families’ primary or sole breadwinners, the gender pay gap has direct impact on men and children as well. Additionally, the pay gap follows women even after they leave the workforce where you will see the impact in lower retirement benefits as well as lower benefits for other programs based on earnings. The wage gap has narrowed since the 1960s, however, that slow progress has stalled in recent years and at this rate women will not reach pay equity with men until 2152.

Need for this bill?

The persistent gender pay gap has resulted in significant state efforts to curb wage discrimination. In 1949, California enacted the Equal Pay Act, which targeted wage discrimination against women by prohibiting an employer from paying an employee a wage rate that is less than the rate of an employee of the opposite sex who does comparable work. SB 358 (Jackson, Chapter 546, Statutes of 2015) made a number of changes to the Equal Pay Act allowing victims of wage discrimination to identify an unlawful wage disparity and seek appropriate remedy. Additionally, in 2016, AB 1676 (Campos, Chapter 856) specified that prior salary cannot, by itself, justify any disparity in compensation under the bona fide factor exception in the existing Equal Pay Act. Further, in 2017, AB 168 (Eggman, Chapter 688) was adopted to prohibit employers from relying on the salary history information of an applicant as a factor in determining whether to offer an applicant employment or what salary to offer. AB 168 also required an employer, upon reasonable request, to provide the pay scale for a position to an applicant for employment.

Comments

According to the author, while recent legislation has made great strides towards eliminating the use of prior salary to justify paying women a lower wage rate, it remains unclear the extent to which prior salary may be used at all. This bill makes clear that prior salary simply cannot be used to justify a wage differential, whether used on its own or in combination with a lawful factor under the Equal Pay Act. However, this bill provides a limited carve-out for using prior salary in a compensation decision in the case of a current employee (for purposes of giving employee raises or bonuses for example), so long as any wage differential from that compensation decision is justified by one or more specified factors per Labor Code §1197.5, including a seniority system or a merit system.

Related/Prior Legislation

AB 168 (Eggman, Chapter 688, Statutes of 2017) prohibited an employer from relying on salary history information of an applicant as a factor in whether to offer employment or what salary to offer. Also required employers, upon request, to provide the positions pay scale.

AB 46 (Cooper, Chapter 776, Statutes of 2017) specified that the Equal Pay Act provisions which prohibit employers from paying a lower wage rate to employees on the basis of gender, race, or ethnicity apply to both public and private employers.

AB 1676 (Campos, Chapter 856, Statutes of 2016) provided that prior salary cannot, by itself, justify a sex-based pay differential for employees performing substantially similar work.

SB 1063 (Hall, Chapter 866, Statutes of 2016) expanded the prohibitions in the Equal Pay Act regarding gender, to include discrimination based on race or ethnicity.

SB 358 (Jackson, Chapter 546, Statutes of 2015) prohibited an employer from paying any of its employees at wage rates less than those paid to employees of the opposite sex for substantially similar work and revised the employer defenses to such pay differentials.

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

SUPPORT: (Verified 6/26/18)

American Association of University Women (co-source)

California Employment Lawyers Association (co-source)

Equal Rights Advocates (co-source)

American Civil Liberties Union of California Center for Advocacy and Policy

California Women’s Law Center

Feminist Majority

Legal Aid at Work

National Association of Social Workers, California Chapter

The Women’s Foundation of California

OPPOSITION: (Verified 6/26/18)

None received

ARGUMENTS IN SUPPORT: According to the sponsors of this bill, the employer practice of seeking salary history from job applicants and relying on it to set a new employee’s pay rate has perpetuated historical discrimination and wage inequalities across the occupational spectrum. They note that the Equal Employment Opportunity Commission has recognized the adverse effect of this practice, advising employers to avoid basing salary decisions on prior salary (U.S.EEOC, Tips for Small Businesses). Proponents argue that while recent legislation has made great strides toward eliminating the use of prior salary to justify paying a lower wage rate, it remains unclear the extent to which prior salary may be used at all. This bill makes it clear that prior salary simply cannot be used to justify a wage differential, whether used on its own or in combination with a lawful factor under the Equal Pay Act.

ASSEMBLY FLOOR: 73-0, 5/17/18

AYES: Acosta, Aguiar-Curry, Travis Allen, Arambula, Baker, Berman, Bigelow, Bloom, Bonta, Brough, Burke, Caballero, Calderon, Carrillo, Cervantes, Chau, Chávez, Chen, Chiu, Choi, Chu, Cooley, Cooper, Cunningham, Dahle, Daly, Eggman, Flora, Fong, Frazier, Friedman, Gallagher, Eduardo Garcia, Gipson, Gloria, Gonzalez Fletcher, Gray, Grayson, Harper, Holden, Irwin, Jones-Sawyer, Kalra, Kamlager-Dove, Kiley, Lackey, Levine, Limón, Low, Maienschein, Mathis, Mayes, McCarty, Medina, Mullin, Nazarian, Obernolte, O'Donnell, Patterson, Quirk, Quirk-Silva, Reyes, Rodriguez, Rubio, Salas, Mark Stone, Thurmond, Ting, Voepel, Waldron, Weber, Wood, Rendon

NO VOTE RECORDED: Cristina Garcia, Melendez, Muratsuchi, Santiago, Steinorth

Prepared by:

6/27/18 9:08:19

**** END ****

SENATE COMMITTEE ON LABOR AND INDUSTRIAL RELATIONS

Senator Ricardo Lara, Chair

2017 - 2018 Regular

Bill No: AB 2282 Hearing Date: June 13, 2018

Subject: Salary history information

KEY ISSUES

Should the Legislature prohibit prior salary from justifying a disparity in compensation?

Should employers be allowed to ask applicants about salary expectations?

Should the Legislature clarify that employers are authorized to make compensation decisions based on a current employee’s salary, so long as any wage differential resulting from that decision is justified by one or more specified factors under the existing Equal Pay Act?

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 or of a different race or ethnicity for substantially similar work, when viewed as a composite of skill, effort, and responsibility, and performed under similar working conditions. (Labor Code §1197.5)
2. Establishes exceptions to these prohibitions where the employer demonstrates the payment is made pursuant to:
   1. a seniority system;
   2. a merit system;
   3. a system which measures earnings by quantity or quality of production;
   4. a bona fide factor other than sex, race or ethnicity, such as education, training, or experience which applies only if the employer demonstrates the factor is not based on or derived from a sex, race or ethnicity based pay differential, is job related, and is consistent with a business necessity, as defined.
3. Specifies that prior salary cannot, by itself, justify any disparity in compensation.
4. Makes it a misdemeanor, punishable by a fine of up to $10,000 and/or by imprisonment, or both, for an employer or other person, as specified, to pay or cause to be paid to any employee a wage less than the rate paid to an employee of the opposite sex, race or ethnicity, or who reduces the wages of any employee in order to comply with wage protections per Labor Code Section 1197.5. (Labor Code §1199.5)
5. Prohibits an employer, including the state, local government and the Legislature, from relying on the salary history information of an applicant for employment as a factor in determining whether to offer employment to an applicant or what salary to offer an applicant, except for information disclosable to the public by law. (Labor Code §432.3)
6. Requires an employer, upon reasonable request, to provide the pay scale for a position to an applicant applying for employment.
7. Does not prohibit an applicant from voluntarily and without prompting disclosing salary history information to a prospective employer, and that employer from considering that information in determining the salary for that applicant.

This Bill:

1. Defines the following terms for purposes of clarifying the above mentioned provisions regarding prior salary inquiries:
   1. “Pay scale” means a salary or hourly wage range.
   2. “Reasonable request” means a request made after an applicant has completed an initial interview with the employer.
   3. “Applicant” or “applicant for employment” means an individual who is seeking employment with the employer and is not currently employed with that employer in any capacity or position.
2. Specifies that the prohibition on asking a job applicant about prior salary does not forbid an employer from asking the applicant about his or her salary expectations for the position being applied for.
3. Prohibits prior salary from justifying a disparity in pay based on sex, race or ethnicity.
4. Excludes from the above prohibition a compensation decision based on a current employee’s existing salary, so long as any wage differential resulting from that compensation decision is justified by one or more specified factors under Labor Code §1197.5, including a seniority system or a merit system.

COMMENTS

1. Background 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. According to the American Association of University Women (AAUW), in 1963 women who worked full-time made 59 cents on average for every dollar earned by a man. Today, women working full time in the United States are typically paid 80 percent of what men are paid, a gap of 20 cents. (The Simple Truth about the Gender Pay Gap, 2017 Edition, AAUW)

The wage gap is even larger for women of color. According to the National Partnership for Women & Families, among women who hold full-time, year-round jobs in the United States, Black women are typically paid 63 cents for every dollar paid to white men, while Latinas are paid just 54 cents for every dollar. Asian women are paid 85 cents for every dollar paid to white men, although some ethnic subgroups of Asian women fare much worse. (America’s Women and the Wage Gap, National Partnership for Women & Families, April 2017)

Research finds that the gender pay gap has lifelong financial effects. According to the AAUW, at a time when 40 percent of mothers with children under the age of 18 are their families’ primary or sole breadwinners, the gender pay gap has direct impact on men and children as well. Additionally, the pay gap follows women even after they leave the workforce where you will see the impact in lower retirement benefits as well as lower benefits for other programs based on earnings. The wage gap has narrowed since the 1960s, however, that slow progress has stalled in recent years and at this rate women will not reach pay equity with men until 2152.

2. Need for this bill?

The persistent gender pay gap has resulted in significant state efforts to curb wage discrimination. In 1949, California enacted the Equal Pay Act, which targeted wage discrimination against women by prohibiting an employer from paying an employee a wage rate that is less than the rate of an employee of the opposite sex who does comparable work. SB 358 (Jackson) of 2015, made a number of changes to the Equal Pay Act allowing victims of wage discrimination to identify an unlawful wage disparity and seek appropriate remedy. Additionally, in 2016 AB 1676 (Campos) specified that prior salary cannot, by itself, justify any disparity in compensation under the bona fide factor exception in the existing Equal Pay Act. Further, in 2017 AB 168 (Eggman) was adopted to prohibit employers from relying on the salary history information of an applicant as a factor in determining whether to offer an applicant employment or what salary to offer. AB 168 also requires an employer, upon reasonable request, to provide the pay scale for a position to an applicant for employment.

According to the author, while recent legislation has made great strides towards eliminating the use of prior salary to justify paying women a lower wage rate, it remains unclear the extent to which prior salary may be used at all. This bill makes clear that prior salary simply cannot be used to justify a wage differential, whether used on its own or in combination with a lawful factor under the Equal Pay Act. However, this bill provides a limited carve out for using prior salary in a compensation decision in the case of a current employee (for purposes of giving employee raises or bonuses for example), so long as any wage differential from that compensation decision is justified by one or more specified factors per Labor Code §1197.5, including a seniority system or a merit system.

3. Proponent Arguments:

According to the sponsors of the measure, the employer practice of seeking salary history from job applicants and relying on it to set a new employee’s pay rate has perpetuated historical discrimination and wage inequalities across the occupational spectrum. They note that the Equal Employment Opportunity Commission has recognized the adverse effect of this practice, advising employers to avoid basing salary decisions on prior salary (U.S.EEOC, Tips for Small Businesses). Proponents argue that while recent legislation has made great strides toward eliminating the use of prior salary to justify paying a lower wage rate, it remains unclear the extent to which prior salary may be used at all. This bill makes it clear that prior salary simply cannot be used to justify a wage differential, whether used on its own or in combination with a lawful factor under the Equal Pay Act.

4. Opponent Arguments:

None received.

5. Prior Legislation:

AB 168 (Eggman) Chapter 688, Statutes of 2017 prohibits an employer from relying on salary history information of an applicant as a factor in whether to offer employment or what salary to offer. Also requires employers, upon request, to provide the positions pay scale.

AB 46 (Cooper) Chapter 776, Statutes of 2017 specified that the Equal Pay Act provisions which prohibit employers from paying a lower wage rate to employees on the basis of gender, race, or ethnicity apply to both public and private employers.

AB 1676 (Campos) Chapter 856, Statutes of 2016 provides that prior salary cannot, by itself, justify a sex-based pay differential for employees performing substantially similar work.

SB 1063 (Hall) Chapter 866, Statutes of 2016 expands the prohibitions in the Equal Pay Act regarding gender, to include discrimination based on race or ethnicity.

SB 358 (Jackson) Chapter 546, Statutes of 2015 prohibits an employer from paying any of its employees at wage rates less than those paid to employees of the opposite sex for substantially similar work and revised the employer defenses to such pay differentials.

SUPPORT

American Association of University Women (Co-Sponsor)

California Employment Lawyers Association (Co-Sponsor)

Equal Rights Advocates (Co-Sponsor)

American Civil Liberties Union of California Center for Advocacy and Policy

California Women’s Law Center

Feminist Majority

Legal Aid at Work

National Association of Social Workers, California Chapter

The Women’s Foundation of California

OPPOSITION

None received

-- END --

Date of Hearing: May 9, 2018

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Lorena Gonzalez Fletcher, Chair

ABPCA Bill Id:AB 2282

Author:(Eggman) – As Amended Ver:March 15, 2018

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

SUMMARY:

This bill makes clarifying changes to the prohibition on requesting a job applicant’s prior salary and prohibits use of prior salary to justify any disparity in compensation. This bill also clarifies that an employer may make a compensation decision based on a current employee’s existing salary, so long as the wage differential resulting from that compensation decision is justified by other specified factors.

FISCAL EFFECT:

Absorbable costs for the Division of Labor Standards Enforcement (DLSE) to enforce the provisions of this bill.

COMMENTS:

1. Background. AB 1676 (Campos), Chapter 856, Statutes of 2016, provides that prior salary, by itself, cannot justify a sex-based pay differential for employees performing substantially similar work. AB 168 (Eggman), Chapter 688, Statutes of 2017, prohibits an employer from relying on salary information of an applicant as a factor in determining whether to offer an applicant employment or what salary to offer.
2. Purpose. AB 2282 makes assorted changes to how an employer may use a job applicant’s prior salary when setting compensation levels. According to the author, these changes will strengthen existing policies aimed at closing the persistent wage gap. AB 2282’s provisions include:
3. Clarifying that an employer may ask about an applicant’s salary expectations and that an “applicant,” for the purposes of the prohibition on asking about prior salary, does not include someone currently working with the employer.
4. Replacing provisions prohibiting prior salary from, by itself, justifying pay disparities with provisions prohibiting prior salary from justifying any disparity. (The author state this change will make clear that prior salary simply cannot be used to justify a wage differential, whether used on its own or in combination with a lawful factor established in current law.)
5. Clarifying an employer may make compensation decisions based on a current employee’s existing salary so long as any wage differential resulting from that compensation is justified, as specified. (The author argues this change will help current employees seeking a promotion and a raise.)

Analysis Prepared by: Luke Reidenbach / APPR. / (916) 319-2081

Date of Hearing: April 25, 2018

ASSEMBLY COMMITTEE ON LABOR AND EMPLOYMENT

Tony Thurmond, Chair

ABPCA Bill Id:AB 2282 (

Author:Eggman) – As Amended Ver:March 15, 2018

SUBJECT: Salary history information

SUMMARY: Clarifies the prohibition on the request for, and use of, prior salary information from job applicants to set compensation and to justify any compensation disparities based on sex, race or ethnicity. Specifically, this bill:

1. Defines key terms regarding the requirement than an employer provide a pay scale, upon reasonable request, to a job applicant, such as:
   1. “Pay scale” means a salary or hourly wage range.
   2. “Reasonable request” means a request made after an applicant has completed an initial interview with the employer.
   3. “Applicant” or “applicant for employment” means an individual who is seeking employment with the employer and is not currently employed with that employer in any capacity or position.
2. Clarifies that the prohibition on asking a job applicant about prior salary does not forbid an employer from asking the applicant about his or her salary expectations for the position being applied for.
3. Prohibits prior salary from justifying a disparity in compensation based on sex, race or ethnicity.
4. Excludes from the above prohibition a compensation decision based on a current employee’s existing salary, so long as any wage differential from that compensation decision is justified by one or more specified factors, including a seniority system or a merit system.

EXISTING LAW:

1. Prohibits an employer from relying on the salary history information of an applicant for employment as a factor in determining whether to offer an applicant employment or what salary to offer an applicant, except in specified circumstances.
2. Requires an employer, upon reasonable request, to provide the pay scale for a position to an applicant applying for employment.
3. Prohibits an employer from paying any of its employees at wage rates less than the rates paid to employees of the opposite sex, for substantially similar work, when viewed as a composite of skill, effort, and responsibility, and performed under similar working conditions, unless the employer demonstrates that one or more specific factors, reasonably applied, account for the entire wage differential.
4. Prohibits an employer from also paying any of its employees at wage rates less than the rates paid to employees of another race or ethnicity, for substantially similar work, as specified.
5. Prohibits prior salary, by itself, from justifying a disparity in compensation based on sex, race or ethnicity.

FISCAL EFFECT: Unknown

COMMENTS: In 2015, California passed landmark legislation to address gender-based pay discrimination when it passed the Fair Pay Act, SB 358 (Jackson) Chapter 546, Statutes of 2015, which amended the Equal Pay Act. The Fair Pay Act enhances the concept of equal pay for equal work and requires that a justification for wage disparity must be consistent with business necessity and that any factor causing such disparity be reasonably applied. In addition, legislation in 2016 provided that an employee’s prior salary, by itself, cannot justify a wage disparity.

According to the author, despite the passage of SB 358, the gender wage gap persists and progress toward closing it is slow. On a national level, “women still make roughly 80 cents for every dollar earned by their male counterparts. The disparity is even larger for women of color. African American women are paid 63 cents and Latinas are paid 43 cents on the dollar.” The author further states, “while recent legislation has made great strides towards eliminating the use of prior salary to justify paying (women) a lower wage rate, it remains unclear the extent to which prior salary may be used at all. This bill makes clear that prior salary simply cannot be used to justify a wage differential, whether used on its own or in combination with a lawful factor under the Equal Pay Act.”

The bill’s cosponsors, including the California Employment Lawyers Association, argues in support that “because women frequently begin their careers earning lower salaries than men, they remain at a stark disadvantage throughout their working lives, especially when employers set pay based on prior salaries. The Equal Employment Opportunity Commission has recognized the adverse effect of this practice, advising employers to avoid basing salary decisions on prior salary.”^[1]

The Ninth Circuit Court of Appeals, in an en banc ruling this month, appears to affirm the principle that prior salary, even in combination with legitimate factors, cannot justify a pay differential based on sex. Decided under the Federal Equal Pay Act, 29 U.S.C. § 2069(d), which requires equal pay for equal work, the court held that “we do not see how the employer’s consideration of other factors would prevent the perpetuation of existing pay disparities if…prior salary is the only factor that causes the current disparity.” See Rizo v. Yovino, 9^th Cir, No. 16-15372, 10 (April 9, 2018).

This bill provides, however, a limited carve out for using prior salary in a compensation decision. The exception allows an employer to consider the existing salary of a current employee for setting a new salary, so long as any wage differential from that compensation decision is justified by one or more specified factors, including a seniority system or a merit system.

The author explains that this could help a current employee, who is seeking a promotion, receive an appropriate raise.

Prior and Related Legislation

AB 168 (Eggman) Chapter 688, Statutes of 2017 prohibits an employer from relying on salary history information of an applicant as a factor in determining whether to offer an applicant employment or what salary to offer. Also requires an employer, upon reasonable request, to provide the pay scale for a position to an applicant for employment.

AB 1676 (Campos) Chapter 856, Statutes of 2016 provides that prior salary cannot, by itself, justify a sex-based pay differential for employees performing substantially similar work.

SB 358 (Jackson) Chapter 546, Statutes of 2015 prohibits an employer from paying any of its employees at wage rates less than those paid to employees of the opposite sex for substantially similar work and revised the employer defenses to such pay differentials.

AB 1017 (Campos) of 2015 would have prohibited an employer from seeking salary history information from an applicant for employment. This bill was vetoed by Governor Brown.

REGISTERED SUPPORT / OPPOSITION:

Support

ACLU of California

American Association of University Women, CA Chapter (cosponsor)

California Employment Lawyers Association (cosponsor)

California Women's Law Center

Coalition of Labor Union Women, California Capital Chapter

Consumer Attorneys of California

Equal Rights Advocates (cosponsor)

National Association of Social Workers, California Chapter

Opposition

None on file.

Analysis Prepared by: Megan Lane / L. & E. /

1. U.S. Equal Employment Opportunity Commission, Tips for Small Businesses, at https://goo.gl/D1cgzO. ↑