Last Thursday, the California Assembly passed AB 1676 (Campos and Gonzalez), which seeks to prohibit businesses and other employers from requesting salary history information from an applicant (or an agent). Further, AB 1676 requires employers, except state and local municipalities, upon reasonable request, to provide the pay scale for a position to an applicant.
AB 1676 was drafted by its authors to prevent penalization by prior salaries which may have been discriminatory. According to those authors, the impact of prior salaries adversely harms gender, racial and industry-related groups. Other supporters argue that, “by creating a less biased structure for negotiating pay during the hiring process, this bill will be a proactive way to help empower women to negotiate a fair salary and hopefully get …closer to achieving pay equity in California.”
A group of chambers of commerce, businesses, and other employers oppose Assembly Bill 1676 arguing that compensation benchmarking based on an applicant’s prior salary is already a frowned-upon business practice. Further, they argue that the bill will subject employers to increased litigation because of a simple inquiry into compensation history, even when it would not harm the applicant. According to a recent report issued by the Assembly Appropriations Committee, AB 1676 will cost between $100,000 and $400,000, annually, in administrative costs depending on the number of claims filed with the Division of Labor Standards Enforcement if the new law is passed by the Senate and signed into law by Governor Brown.
Although the California Assembly, Senate, and Governorship are held by the same political party, AB 1676 is not “signed, sealed, and delivered.” In fact, Governor Jerry Brown vetoed a similar bill, AB 1017 (Campos) in 2015. As a result, it remains to be seen whether a new year will yield a different result from the California Governor. Regardless, however, employers of all sizes should keep a keen eye out for updates to California labor laws to prevent a costly complaint from being filed next time you interview a candidate.
Ben Schwefel is an Associate Attorney at The Loftin Firm. For questions relating to a corporate governance, estate planning, or real estate matter, contact Ben at 760-814-9649.