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New law clarifies key terms in salary history inquiry ban

| Aug 1, 2018 | Employment Law |

As many California employers are aware, state law now prevents employers from asking job applicants about their salary history or from using salary history to make decisions regarding job offers or starting salaries. As we discussed in a previous post, this new law, which went into effect on January 1, also requires that employers provide pay scale information to applicants upon reasonable request.

This law did not, however, clearly define the key terms involved in this requirement, namely “applicant,” “pay scale” and “reasonable request.” Assembly Bill 2282, which Gov. Jerry Brown signed into law on July 18, clarifies what these terms mean in the context of the new requirements:

Applicant: An applicant is someone who is not currently employed in any capacity by the employer from whom they are seeking a job.

Pay scale: A pay scale is the salary range or hourly wage range for the position.

Reasonable request: A reasonable request is one made by the applicant after the employer has interviewed the applicant for the job.

In other words, if someone who is not currently employed by your business interviews for a job and then asks about the pay scale, you generally must provide them with a salary range or hourly wage range for the position they applied and interviewed for. Employers should prepare this information before beginning the hiring process for any position open to external candidates.

AB 2282 also addresses another common line of inquiry in applicant interviews: salary expectations. The new law clarifies that the employers may still ask applicants about their salary expectations for a position.

Salary history information and current employees

By defining “applicant” as someone who is not currently employed by the company, the recent revisions clarify that the salary history restrictions apply only to external applicants and not to internal applicants for a position. That is, the law does not necessarily prevent employers from seeking salary history information for internal applicants for a position, or from using a current employee’s current salary to determine a salary offer for a promotion.

However, it is important to remember that the intent of the salary history information ban is to prevent employers from relying on salary history as a way of justifying gender wage gaps or disparities in compensation based on race or ethnicity. While AB 2282 clarifies that the law does not prevent employers from using a current employee’s existing salary to make a compensation decision for a new position, any resulting wage disparity must still be justifiable based on factors specified in the law, such as a seniority or merit system.

California employers should review their job applications and onboarding procedures to make sure they comply with the new salary history ban. The skilled lawyers at Duggan Law are happy to help.