Category Archives: Equal Pay Laws

UPDATED: California Bans Applicant Salary History Inquiries

Contributed by Noah A. Frank, November 8, 2017

Add salary history to the growing list of topics that may be off limits on employment applications and during interviews, depending on where your business operates.

32420632 - law gavel on a stack of american moneyCalifornia joins a growing list of jurisdictions banning salary history inquiries. On October 12, 2017, California Governor Brown signed Assembly Bill 168, which prohibits employers from seeking or relying upon applicants’ salary history and using such information as the basis for establishing compensation. The new law takes effect on January 1, 2018.

Like ban-the-box legislation (banning inquiries into criminal conviction history) and sick leave ordinances, this is likely the start of a national trend enacted on a jurisdiction-by-jurisdiction piecemeal basis.  California joins Massachusetts, Oregon, and Delaware, along with several municipalities, such as New York City, Philadelphia, Pittsburgh, and U.S. territory Puerto Rico, to enact such legislation in an emerging national trend.  Indeed, since we reported on Illinois’s forestalled HB1462 amending the Equal Pay Act in September, the Illinois House has overridden the governor’s veto, and the bill is on its way to the Illinois Senate for similar consideration.

The Basics

Like the other jurisdictions’ laws, California’s legislation is meant to remedy past gender-based compensation discrimination.  However, given the broad language, this bill will apply to all protected classes such as (and not limited to) race, religion, military status. Under AB-168, all employers in the state of California:

  1. May not inquire directly or indirectly into an applicant’s compensation and benefits (unless publicly available as provided by other laws).
  2. May not rely on salary history as a factor in determining whether to offer employment to an applicant or what salary to offer an applicant.
  3. Must provide the pay scale for the position to an applicant applying for employment “upon reasonable request.”  Note that this is a fairly unique provision in California’s law (at least for now).
  4. May not allow prior salary alone to justify any disparity in compensation.

Notably, if an applicant “voluntarily and without prompting discloses” compensation history, the employer may then consider it as a factor in determining the salary to offer an applicant.

Compliance Made Easy

In light of these trends in the workplace, employers must ensure that they are compliant with new and emerging laws as enacted, and to also perform routine audits – including employment forms, handbooks, policies, and templates.  As it relates to these salary inquiry laws, employers should (1) ensure job applications are compliant and do not include salary/wage inquiries, and (2) review interview questions, especially “scripts” used by management, and ensure that those conducting interviews are aware of the new unlawful inquiry.

What’s the Bottom Line on Salary History Inquiry Bans? Don’t Ask.

You may not ask applicants “how much do you currently make?” But you may ask: “how much would you like to earn in this position?” or “What are your compensation expectations?” or other similar future-oriented inquiries.

5, 4, 3, 2, 1… Happy New Year! A Look Ahead to 2016 and Employment Laws

Contributed by Heather Bailey

2016 New YearEveryone rings in the New Year differently – some with a party with friends and family, sparkling grape juice with their kids, traveling to a new destination or watching the ball drop in Times Square. Whatever tradition you choose to bring in the new year, the one thing we can all count on is that there will be new employment laws waiting for you on your desk come January 2nd (if not already).

Paid sick leave laws in many states are requiring that you pay your employees to take time off when ill, to care for an ill family member, or to go to the doctor. The federal Department of Labor is even helping states fund such initiatives, so you know they are important. The good news is that many of your paid sick time policies or vacation accruals already cover the sick time now required by these new laws. The main issue is that the paid sick leave law might accrue at a faster rate than the company. If that happens, you will need to allow the employee to take the paid leave sooner and “borrow” the sick time off before it’s actually earned under your existing policy. If you don’t already have such a policy in place, you may need to implement one in your area.

Gender equal pay is highlighting many agendas these days, including the federal and state Departments of Labor, since women continue to get paid less than their male counterparts. This includes hefty fines and penalties. We recommend you look at your compensation rates annually to ensure there are no gender gaps in pay for doing the same job. As President Obama said in his 2014 State of the Union speech, “A woman deserves equal pay for equal work… It’s time to do away with workplace policies that belong in a ‘Mad Men’ episode.”

DOL white collar exemption salary increase should not be news to you. If it is, then please see our recent blogs Urgent Alert: U.S. DOL Proposes Major Changes to Exempt Salary Status and Use Independent Contractors? DOL Says Almost Everyone Is An Employee Under FSLA.

Do not forget to check your state and city regulations for increased minimum wage hikes.

New Year’s Resolutions:

Information and knowledge are key here. Sticking your head in the sand and the “dealing with this later” attitude will only cause you headaches – and more importantly, money – down the line. Meet with your employment counsel and find out how new laws affect your business. Then, you can modify and adopt new policies and practices with your eyes wide open to ensure you ring in 2016 right.

California Passes Tough Equal Pay Law: Prepare Now for the January 1, 2016 Effective Date

Contributed by Jonathon Hoag

California Governor Jerry Brown has signed into law an amendment to California’s gender pay equality law to make it one of the toughest equal pay laws in the nation. The new law takes effect January 1, 2016, giving California employers just a couple of months to prepare.

California and federal law currently prohibit employers from basing pay on an individual’s gender. The California legislature determined that a gender gap of 16 cents on the dollar still exists notwithstanding current laws. Accordingly, the new law includes strict standards with the aim of closing the gender pay gap in California.

gender equalityExisting law requires equal pay for equal work performed in the same establishment. The new law changes this standard by requiring equal pay for those performing “substantially similar” work regardless of job title. In addition, pay comparisons are not limited to the same establishment, allowing comparisons with employees working at different locations (bona fide differences based on regional cost of living differences are acceptable, but this is going to be subject to challenge).

If a pay differential between substantially similar positions is shown, the employer has the burden to establish that the pay differential is based on one or more of the following permissible factors: (1) a seniority system; (2) a merit system; (3) a system that measures earnings by quantity or quality of production; or (4) a bona fide factor other than sex, such as education, training or experience. While these exceptions remain the same as existing law, employers will be required to show that each factor was relied upon reasonably and that the factors account for the entire wage differential.

The new law includes an additional private right of action for employees who claim they have been discharged, discriminated, or retaliated against for exercising their rights under the statute. The law also gives employees the right to disclose, inquire, and discuss wages, which reflect current enforcement practices under the National Labor Relations Act.

California’s new equal pay law is expected to increase employment-based claims and litigation. Employers should take the following steps to prepare and limit exposure to such claims:

  • Review substantially similar jobs to detect any pay differences.
  • Identify the factors that justify any pay differences and organize documentation that shows the factors are reasonably applied and account for the entire differential.
  • Ensure recordkeeping policies/practices for wage-related information provide for at least a 3-year retention period.
  • Train supervisors on the new requirements, including the employees’ right to discuss wages.
  • Conduct periodic audits to maintain compliance.