Late last month, California Governor Jerry Brown signed Assembly Bill 2282 (“AB 2282”) into law. The Bill attempts to provide California employers with answers to questions that remained after Assembly Bill 168 (the “Salary History Ban” bill) became law. As a reminder, AB 168 (1) prohibits California employers from asking job “applicants” for salary history information (and relying on this information), (2) requires employers to provide to applicants a “pay scale” upon “reasonable request”, and (3) prohibits employers from paying individuals of different sexes, races, or ethnicities different rates for competing substantially similar work, without having a justification for the pay disparity.
After AB 168’s passage last October, California employers were often left wondering:
- What if a current employee asks for a new position—is that current employee an “applicant” and subject to the salary history ban law?
- What is a “pay scale” and what constitutes a “reasonable request” for one?
- What questions can I ask an applicant?
- What factors can I rely on that would justify a wage differential between a male and a female worker?
In response, AB 2282 provides clarification in the following ways:
- The term “applicant” only refers to external job-seekers seeking a new job with the company, and does not extend to current employees seeking a new position. Therefore the company may seek and rely upon salary information of its current employees when considering the employee for a new position.
- The term “pay scale” means a salary or hourly wage range and a “reasonable request” is one that has taken place after an initial interview has taken place. Therefore, an employer is not required to provide a bonus or equity range, and must only provide the salary or hourly wage range to an applicant after an initial interview is completed.
- While employers may not ask about salary information, an employer may ask about an applicant’s salary expectations. Additionally, if an applicant voluntarily discloses his or her salary information, the employer may rely on this information when considering an offer of employment. Therefore, there is still much information that can be deduced about an applicant’s salary expectations, though the employer must be careful not to ask questions that are prohibited by law.
- Factors to be considered when justifying a wage disparity are: (a) a seniority system (b) a merit system (c) a system that measures earnings by quantity or quality of production or (d) a bona fide reason other than sex, race or ethnicity, such as education, training or experience—so long as this factor is not derived from a sex-based, race-based, or ethnicity-based differential in compensation, is job related, and is consistent with a business necessity. Therefore, wage disparities are not per se invalid; though if challenged, employers must be able to show one of the above factors exist.
Salary history bans continue to appear all across the country. Hogan Lovells’ employment team is especially apt to help employers navigate through these muddy waters as these laws often take time to become clearer through legislative and judicial processes.