New Salary History Laws: California Joins Other States in Barring Employers From Asking Applicants About Past Pay

California became the latest jurisdiction to prohibit employers from asking job applicants what they earned in previous jobs with the Oct. 12 signing of A.B. 168, which takes effect Jan. 1, 2018. 

Laws banning salary history inquiries have also been enacted in Delaware, Massachusetts, Oregon, Puerto Rico, New York City, Philadelphia, and San Francisco. 

The goal of these laws is to stop the cycle of pay inequity that can occur if new employers rely on past salary levels in deciding how much compensation to offer job applicants. Once workers have suffered a pay disparity, salary history disclosures can put them at a disadvantage when negotiating subsequent compensation packages, and they can face a reduction in earning power across an entire career. 

The restrictions in California are similar to those enacted elsewhere. As a general rule, employers will be barred from seeking applicants’ salary history information. The ban is defined broadly to encompass details on benefits as well as compensation, and it applies to both oral and written inquiries, whether they’re made directly by an employer or through an agent. 

However, the law doesn’t prevent applicants from offering up salary history information on a voluntary basis, nor does it keep employers from relying on voluntary disclosures in setting salaries for applicants who have volunteered the information. 

A word of caution regarding voluntary disclosures: California’s existing law on pay discrimination states that an employee’s prior salary can’t serve as the sole justification for a disparity in compensation. Because of this provision, employers must be careful about using salary information disclosed by applicants as a basis for paying them less than other employees doing similar work. 

When the new law kicks in, employers in the Golden State will also face a unique requirement—they’ll have to provide a position’s pay scale if a job applicant requests it. This provision sets California apart from other jurisdictions that have adopted salary history laws. 

What’s Safe for Employers?

With California joining the list of states and cities that have enacted bans on salary history inquiries, the issue is sure to receive added attention. And the clock is already ticking for human resources departments to review current policies and make adjustments to existing hiring practices. 

How can employers ensure they won’t run afoul of the new laws? Before getting into that, let’s quickly review the effective dates. Puerto Rico’s salary history restrictions took effect March 8. The Oregon restrictions have also taken effect, but employers can’t be sued for violating the pay history ban until Jan. 1, 2019, and they won’t face penalties in the form of compensatory or punitive damages until 2024. 

Next up is the New York City ordinance, effective Oct. 31. Then comes Delaware on Dec. 14, followed by California on Jan. 1, 2018, and Massachusetts and San Francisco on July 1, 2018. Philadelphia’s salary history ordinance was slated to take effect May 23, but the city delayed enforcement in light of a legal challenge by the local Chamber of Commerce. 

Returning to the subject of what’s safe for employers, attorneys contacted by Bloomberg BNA say conversations with applicants should focus on salary expectations, not how much they were paid in past jobs. 

Employers can also use market data in formulating pay packages. As an example, the PayScale database can help employers set a competitive compensation level based on job requirements, qualifications, and location. 

For related coverage and more compliance suggestions, see Can You Ask for Salary History in Your State?, as well as More Laws Enacted to Ban Salary History Inquiries and Will Pay History Bans Complicate Hiring Practices?

Bloomberg BNA’s HR Decision Support Network is your one-stop resource for employment-law compliance, and a subscription includes 100 PayScale salary reports per year. Start your free trial today!