Beginning Jan. 1, 2018, California employers will no longer be able to ask job applicants about their salary history. California joins a small but growing group of states and cities that have enacted similar measures, including New York City, San Francisco, Philadelphia, Oregon, Delaware and Massachusetts. This development is the latest in a number of California legislative initiatives designed to promote pay equity.
Under California’s new law, Labor Code Section 432.3, employers may not ask, either orally or in writing, for an applicant’s compensation or benefits history. In addition, an employer cannot rely on an applicant’s past salary as a factor in determining whether to offer employment or in determining what salary to offer. Lastly, the new law requires employers to provide, “upon reasonable request,” the “pay scale” for the applicable position.
However, there are a couple of exceptions to Section 432.3. First, a prospective employer may consider an applicant’s pay history in determining what salary to offer the applicant if the applicant voluntarily offers salary history without prompting. But even if an applicant voluntarily offers salary history, the prospective employer may not ask additional questions about the applicant’s compensation or benefits history, such as requesting the employee to provide copies of W-2s related to prior employment or other documents to support the employee’s voluntary disclosure.
Second, pay history may be considered if it is publicly available under federal or state law, such as through California’s Public Records Act or the federal Freedom of Information Act. However, California’s Fair Pay Act (Labor Code section 1197.5) prohibits employers from relying solely on an employee’s prior salary history to justify a sex, race or ethnicity-based pay difference.
To comply with this law, employers should remove questions regarding salary history from job applications and other hiring materials, such as template interview forms. In addition, employers should counsel their internal recruiters, interviewers and others involved in the hiring process about these new obligations to ensure they avoid asking questions about an applicant’s salary history. Employers interested in gauging the market rate for a position or an applicant’s salary expectation should plan to replace salary history questions with questions about an applicant’s desired salary. Over time, specific guidance will develop regarding the application of the new law.
The authors all practice at Faegre Baker Daniels. Susan Elgin, an associate in the firm’s Des Moines, Iowa office, represents businesses in employment litigation and advises clients in the area of employment law. Chuck Knapp, a partner in the firm’s Minneapolis office, leads Faegre Baker Daniels’ employment litigation team and focuses his practice on representing employers in employment-related litigation. Bonita (Bonnie) Moore, a partner in the firm’s Los Angeles office, is a member of the firm’s labor and employment group. Dan Prokott, a partner in the firm’s Minneapolis office, advises businesses regarding complex workplace matters.