More Money, More Problems

AB 2282 Further Clarifies California’s Salary History Ban Legislation

California law has made great strides toward eliminating the use of prior salary information to justify wage differentials—differentials that have led to a significant wage gap between men and women. Indeed, full-time female workers in the United States are typically paid 80% of what men are paid. This wage gap is even larger for women of color, who are typically paid 63 cents (African American women), 54 cents (Latina women), or 85 cents (Asian women) for every dollar paid to white men.[1]

In response to this disparity in compensation, California legislators have passed several laws over the years in an attempt to close the gap:

• SB 358 (2015): prohibited an employer from paying any of its employees less than those paid to employees of the opposite sex for substantially similar work.

• SB 1063 (2016) expanded the provisions of Equal Pay Act regarding gender to include discrimination based on race or ethnicity.

• AB 1676 (2016): provided that prior salary could not, by itself, justify a sex-based pay differential for employees performing substantially similar work.

• AB 46 (2017) clarified that the Equal Pay Act provisions that prohibit employers from paying a lower wage rate to employees on the basis of gender, race, or ethnicity apply to both public and private employers.

• AB 168 (2017) prohibited an employer from relying on salary history information of an applicant as a factor in whether to offer employment or what salary to offer. Also required employers, upon reasonable request, to provide the position’s pay scale to the applicant for employment.

While AB 168 was possibly one of California’s biggest steps toward reducing compensation disparities, it still left open many questions: for instance, what does “pay scale,” “reasonable request,” “applicant,” or “applicant for employment” mean? In addition, if an employer cannot ask about an applicant’s prior salary, can it at least ask the applicant what salary he or she is expecting? How does the employer’s current employees’ salaries impact new hires’ compensation? And, last but not least, does the law only prevent pay disparities based on sex?

On July 18, 2018, California legislators passed Assembly Bill No. 2282 in an effort to clarify these unanswered questions. For instance, it clarified the below definitions as follows:

• “Pay scale” shall mean a salary or hourly wage range;

• “Reasonable request” means a request made after an applicant has completed an initial interview with the prospective employer; and

• An “applicant” and “applicant for employment” mean an individual seeking employment with the employer who is not currently employed with that employer in any way.

Further, the Bill clarifies that employers can still ask applicants about their salary expectations for the position being applied for, and employers can consider their current employees’ salaries when making a compensation decision for substantially similar work, so long as any wage differential resulting from that decision is justified by seniority, merit, quality or quantity of production, or any other bona fide factor other than sex—such as education, training, or experience.

Finally, the Bill clarifies that not only can sex not be used to justify a wage disparity, but also, neither can race nor ethnicity.

Pay disparities across the occupational spectrum have lifelong financial effects. And, although the future for closing the wage gap remains murky, one thing now seems crystal clear: prior salary history simply cannot be used to justify a wage differential.

[1] Assembly Bill No. 2282, Senate Floor Analyses (June 27, 2018), citing to America’s Women and the Wage Gap, National Partnership for Women & Families, April 2017.

Author: Kymberly LeGolvan, Associate.

The Maier Law Group helps companies ensure that their policies and practices comply with the relevant workplace regulations.  Please contact us at info@maierlawgroup.com for more information.

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