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New California Law Prohibits Salary History Inquiries

California Governor Jerry Brown signed into law October 12 a statewide ban prohibiting employers from inquiring into a job applicant’s salary history. AB 168, an effort to combat the perpetuation of pay inequities between men and women, applies to all employers in California, regardless of size. It takes effect January 1, 2018.

Codified in California Labor Code Section 432.3, the new law prohibits an employer from relying “on the salary history information of an applicant for employment as a factor in determining whether to offer an applicant employment or what salary to offer an applicant.” The law also prohibits an employer, whether “orally or in writing, personally or through an agent,” from seeking “salary history information, including compensation and benefits, about an applicant for employment.”

However, there are two notable exceptions to the new restrictions.

First, an employer will be allowed to review “salary history information disclosable to the public pursuant to federal or state law.” Second, salary history may be discussed when applicants “voluntarily and without prompting” by the prospective employer disclose prior salary history. In that circumstance, an employer is allowed to consider or rely on the voluntarily disclosed salary history information to determine the salary for the applicant. However, the employer may not use prior salary, by itself, to justify any disparity in compensation between workers of different sexes who are performing substantially similar work.

The statewide law follows San Francisco’s passing of the Parity in Pay Ordinance. This ordinance, passed on July 19, is similar but more comprehensive than AB 168. It will take effect in the city and county of San Francisco on July 1, 2018.

In light of these new laws, any employer with operations in California should revisit its recruitment processes, including applications (whether in digital format or otherwise), and retrain hiring personnel.

If you need any assistance in preparing for compliance, please contact Michelle La Mar.