Clarification on California’s Salary History Ban

California’s legislation that restricts the use of salary history recently underwent several changes that will take effect on January 1, 2019. In July 2018, California Governor Jerry Brown signed the Fair Pay Act Bill (A.B. 2282), which amends and clarifies several components of the state’s existing salary history ban.

The Existing Law

California’s Equal Pay Act (A.B. 168), which originally went into effect in January 2018, prohibits employers from asking an applicant about salary information and from relying on that information as a factor in determining whether to offer an applicant employment or what salary to offer. Additionally, the employer must provide pay scale information for the position being applied to upon reasonable request from the applicant. Lastly, A.B. 168 allows employers to consider self-disclosed salary history information if the applicant provided it “voluntarily and without prompting.”

Fair Pay Act Bill (A.B. 2282) Amendments

The existing law left several key terms undefined, causing confusion for employers.  A.B. 2282 specifically defines the terms “applicant,” “pay scale” and “reasonable request” as follows:

• Applicant/applicant for employment: an individual seeking employment that is not a current employee.
• Reasonable request: request made after an applicant has completed an initial interview.
• Pay scale: salary or hourly wage.

Consequently, employers are only required to provide pay scale information to prospective employees who have completed an initial interview. Pay scale information does not need to be provided to prospective employees who have yet to interview for the position or to current employees.

Clarifications

The law does, however, offer clarification on how employers may use salary history information for current employees. Under A.B. 2282, an employer may determine internal salaries based on a current employee’s salary history; however, it is important to note that when a compensation decision results in a wage differential between employees, the differential must be justified by one or more factors including seniority or merit system. Employers should proceed cautiously when using salary history when determining internal salaries to ensure that there was a justifiable factor.
 
Lastly, A.B. 2282 provides guidance on how employers can avoid “prompting” an applicant to disclose salary history information by clarifying that employers may only ask an employee about their “salary expectations.”
 
Although these amendments provide further guidance on California’s salary history ban, California employers should proceed cautiously when determining salary for prospective and current employees alike.