Imagine a company considering an asset purchase from a business with employees in California. Can the company obtain the compensation and benefits information of these California employees during the due diligence process and then use such information in making offers of employment to the target’s employees? The answer to this question depends on how courts will read Section 432.3 of the California Labor Code, effective as of Jan. 1, 2018, which prohibits employers from relying on salary history in considering whether or not to offer employment to “applicants for employment.”

In this month’s column, we review the language and policy considerations underlying Section 432.3, and we propose strategies buyers may wish to consider in seeking to comply with California law.

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