After California’s legislature made significant changes to the California Equal Pay Act (or the “EPA”) in 2017, employers within the state likely scrambled to analyze and modify their hiring practices to comply with the new requirements of the law by its effective date of January 1, 2018. These employers faced challenges of uncertainty in updating their policies due to several undefined key terms within the amendment to the EPA, which left a lot of unanswered questions about the requirements of the law. Thankfully, California’s Assembly Bill 2282 (“AB 2282”), which took effect January 1st of this year, should bring some clarification to employers about these requirements.1
The EPA was originally enacted in 1949 to prevent employers from paying its employees less than those of the opposite sex for equal work. To further this goal, the law now generally prohibits California employers from relying on the salary history of an applicant for employment as a factor in determining whether to offer the applicant employment and, if so, what salary to offer.2 The law forbids employers from asking applicants for this information in any manner, but it does not prohibit employers from considering salary history information that applicants voluntarily offer.3 Employers are also allowed to ask applicants about their salary expectation for the position being applied for.
The law also requires employers to provide the pay scale for a position to an applicant who is applying for employment upon the applicant’s reasonable request for the information. The key terms “applicant,” “reasonable request,” and “pay scale” were left undefined during the previous update to the EPA. Realizing that this ambiguity was an issue for employers who wanted to comply with the law, California lawmakers enacted AB 2282 to amend the EPA to provide a clear definition of these terms:
(1) “Applicant” refers to an individual who is seeking employment and is not currently working for the employer in any capacity. This would rule out current employees who wish to apply for new positions or promotions with the same company.
(2) “Reasonable request” means a request made after an applicant has completed an initial interview with the employer.
(3) “Pay scale” is now defined as a salary or hourly wage range. This means that after the applicant has completed an initial interview with the employer, the employer must provide a salary or hourly range if the applicant asks for the information.
Finally, AB 2282 provides clarification regarding the extent to which an employer may consider salary history when making an employment decision if the employer is permissibly aware of this information. Though employers cannot justify discrepancies in compensation with prior salary history alone, they may consider this information as a factor while making the employment decision. However, they must also be able to justify any resulting wage discrepancies by at least showing that one or more of the following factors exists: (1) a seniority system, (2) a merit system, (3) a system that measures earnings by quantity or quality of production, or (4) another “bona fide factor”, such as education, training or experience.
Now that these EPA requirements have been clarified, California employers should take steps to ensure that their job applications and hiring practices comply with the law. These steps may include reviewing written policies as well as informing employees who are involved in the hiring process, such as those performing interviews, of the law’s requirements. Of course, ESS recommends that all employers seek legal counsel familiar with California’s employment laws while addressing this issue, as all companies’ situations are unique, and their legal needs will likewise differ.
1California Assembly Bill No. 2282.
2There are exceptions to this prohibition, such as salary history information that is disclosable to the public pursuant to federal or state law.
3Voluntarily offer means without any prompting by the employer.
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