A new law in California is squarely aimed at reducing historical wage disparity, particularly between male and female employees. On January 1, 2018, a new law will take effect in California to prohibit employers from seeking “salary history information, including compensation and benefits, about an applicant for employment.” The new law, Section 432.3 of the Labor Code, also requires employers to provide the pay scale of the position to the applicant upon reasonable request.
But even under this new law, employers can still access salary history information under certain circumstances. Employers may review salary history information that is publicly available under federal or state law, including information that is obtainable under the California Public Records Act or the federal Freedom of Information Act. Employers may also consider and rely on salary history information in determining the salary for that applicant, if the “applicant voluntarily and without prompting discloses salary history information to a prospective employer….” But, even when employers can rely on voluntarily disclosed salary information to set a particular salary, job applicants are still protected by California’s Equal Pay Act. Any prior salary information about the applicant still cannot be used as the sole justification for “any disparity in compensation” for employees of different sexes, races, or ethnicities for “substantially similar work.”
It seems likely there will be a challenge to the constitutionality of the new restriction, most likely on free speech grounds. Other states and municipalities have passed similar laws restricting employers from inquiring about salary history. Philadelphia has a similar ordinance passed earlier this year to prohibit employers from asking an applicant about prior salaries and from relying on salary information unless that information was voluntarily disclosed by the applicant. The Chamber of Commerce for Greater Philadelphia filed a lawsuit, challenging the ordinance on several grounds, including “chilling” the protected speech of employers under the First Amendment, and violating the Due Process Clause of the Fourteenth Amendment because of the severe penalties employers risk incurring. While this case is still pending, the Chamber of Commerce raises questions of constitutionality that could apply as well to California’s new law.
Employment laws change constantly at federal, state and local levels. In preparation for the new year, employers should review the documents they use in the hiring process, including job applications and new hire documents, and remove questions pertaining to salary history. Employers should also instruct any employees who may be interviewing applicants not to ask about an applicant’s salary history. And, for each open position, employers should ensure pay scales are readily available to disclose in response to an applicant’s request.
Conkle, Kremer & Engel attorneys are experienced at helping employers navigate the shifting maze of laws and regulations they face, and resolving employment issues as they arise.