As of January 1, 2018, California employers will no longer be able to ask a job applicant about his or her salary history.  California joins three other states (Delaware, Oregon, Massachusetts), three cities (New York City, Philadelphia*, San Francisco), and Puerto Rico, all of which have similar laws prohibiting employers from seeking or relying on an applicant’s salary history when making hiring and compensation decisions.  Under AB 168, employers:

(1) May not ask, either orally or in writing, personally or through an agent, for an applicant’s prior salary history, including compensation and benefits needs and requirements;

(2) May not consider such information, if it is learned, in determining whether to offer employment to that applicant and if so, what compensation package should be offered; and

(3) Must provide a pay scale for the position being applied for upon reasonable request of the applicant.

There are very few caveats to these rules.  For example, applicants are not prohibited from voluntarily, without any prompting by the employer, disclosing their salary history, and if they choose to do so, employers may consider that information.  Additionally, the law does not apply if the salary history is disclosable to the general public pursuant to federal or state law.  Finally, the law does not define “pay scale” or “reasonable request.”

While proponents argue that this law will help to narrow the gender wage gap, many employers and other groups point out that it eliminates not only their ability to attract the right people to the positions, but also their ability to negotiate a fair wage, without fear of a lawsuit if they say the wrong thing.

California employers must act now to prepare themselves for implementation of this new law to ensure they are in compliance.  They should update their employee and hiring manuals, train hiring personnel to avoid all questions pertaining to salary histories, including benefits packages, and establish pay grades for each position to be able to respond to requests from applicants.

*The Philadelphia law is currently being challenged.