Employment Law Alert: New California and San Francisco Laws Ban Inquiries Into Prior Salary History of Job Applicants

California AB 168

On October 12, 2017, Governor Jerry Brown signed into law AB 168, which goes into effect January 1, 2018. The most significant impact of AB 168 is that it will require employers to remove inquiries about prior salary history from their hiring and salary-setting processes, including removal of such questions from employment applications. More broadly, AB 168:

(1)   Prohibits employers from relying on the salary history information of an applicant as a factor in determining whether to offer employment to an applicant or what salary to offer an applicant;

(2)   Prohibits an employer, personally or through an agent, from seeking salary history information, including compensation and benefits, about an applicant; and

(3)   Requires an employer, upon reasonable request, to provide the “pay scale” for a position to an applicant applying for employment.

Under the new law, an applicant may, voluntarily and without prompting, disclose salary history information to a prospective employer. The law also does not prohibit a prospective employer from considering or relying on that voluntarily disclosed salary history information in determining the salary for that applicant. However, prior salary by itself may not justify any disparity in compensation between employees of a different sex, race, or ethnicity for performing substantially similar work pursuant to the California Fair Pay Act.

San Francisco Parity In Pay Ordinance

Earlier this year, San Francisco passed the Parity in Pay Ordinance, which becomes operative July 1, 2018. The Ordinance covers all applicants applying for employment in San Francisco and whose application will be “solicited, received, processed or considered, whether or not through an interview” in San Francisco.

Similar to the new state law, the Parity in Pay Ordinance bans San Francisco employers from considering or relying on an applicant’s salary history in determining whether to hire an applicant or what salary to offer the applicant, and bans inquiries regarding an applicant’s salary history.

The San Francisco Ordinance goes farther than AB 168 by prohibiting employers from disclosing a current or former employee’s salary history to that person’s prospective employer without that employee’s authorization, unless the release of salary history is required by law, part of a publicly available record, or is subject to a collective bargaining agreement.

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Employers should review their employment application forms, as well as hiring and compensation policies and practices, to ensure compliance with these new laws. Please note that neither AB 168 nor the San Francisco Parity in Pay Ordinance prohibit employers from questioning applicants about pay expectations or requirements (as distinguished from prior pay history).

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